Hotel franchising in Africa shines brightly as a strong operating model for future growth

Africa’s hospitality industry is on an upward trajectory with travel and tourism growing at a rapid pace. According to the first UNWTO World Tourism Barometer^(1), the continent, alongside the Middle East and Europe, performed the strongest during 2023 with a 96% recovery of pre-pandemic visitors. 

Namibia is experiencing a similar recovery trend to its international hospitality counterparts. Last October, the Hospitality Association of Namibia announced the impressive performance of the tourism sector during the third quarter of 2023. The country achieved a 65 % occupancy rate across local accommodation establishments. This figure is notably higher than the equivalent period in 2019, surpassing it by a quarter of a per cent. 

A proven success, and the number one model for international brands, hotel franchising can be viewed as a trifecta. The property owner or developer who wants to open a hotel and to leverage the associated recognition and value of aligning with a hotel brand; the hotel brand, whose aim of franchising as a business model is to grow and expand globally, and a third-party operator like Valor Hospitality who assist both property owner and hotel brand in driving the strongest commercial returns. 

Valor Hospitality will be present at this year’s  African Hospitality Investment Forum (AHIF) as one of the role-players who are committed to transforming the face of hospitality in Africa. AHIF is the leading hospitality investment forum on the African continent. Its 2024 edition will be taking place for the first time in Southern Africa from 25 – 27 June in Windhoek, which marks a significant milestone for Namibia. 

“We have seen international brand franchises deliver better results for property owners in competitive markets and it has become the number one business model in the USA and Europe,” says Michael Pownall, Managing Partner: MEAA Valor Hospitality. “It is delivering stronger commercial results, which is well worth exploring in Africa.” 

The benefits of hotel franchising from a commercial sales, marketing, reputational, comfort, safety, and security point of view ticks all the boxes for property owners wanting to attract international travellers who seek a comfortable stay under a recognisable hotel brand. In addition, property owners can also tap into the global loyalty systems i.e., the customer base who want to be continuously rewarded for brand loyalty. 

“More than ever, the hotel franchising business model is desirable to property owners who want to be more involved in their properties and who demand stronger commercial returns from their assets,” says Mike Devereux, Chief Development Officer for Valor Hospitality. “They require operators like Valor Hospitality, who have a regional presence with a hands-on approach, to push the performance.”

“Countries go through turmoil and cycles and the risk in opening a new hotel often has a major impact on a property owner’s decision to do so. The costs and effort put into establishing an independent hotel brand instead of aligning with an international hotel brand certainly mitigates this risk,” he says. “We have found that property owners who have developed a hotel in partnership with a hotel brand, continue developing with that same brand because they are extracting extreme value from doing so.”

Referring to themselves as a FIMOS – Fully Integrated Management and Operations Solution, Valor provide every service possible to clients as well as a full suite of unique Hospitality Advisory ideas with proven results. Valor embarks on the hotel franchising journey with a property owner by reviewing what the business requires, and the position of its surrounding market, and by offering solutions and opportunities to enable healthy results that will deliver to the maximum.

Essentially, Valor Hospitality is on the ground with a 360-degree approach, ready to engage with property owners and investors who want to develop a hotel or have an asset that requires assistance. 

“We play a critical role for property owners in that we are 100% aligned with each of our clients in finding the right solution however, in Sub-Saharan Africa, we have a master franchise agreement with IHG due to our global management of many hotels within their portfolio of brands. Our entire philosophy comes from a unique selection process for each asset. This independent objective and expert view are invaluable to owners.”

“There is a strong emotional connection between Valor Hospitality and a property owner who would have more flexibility on many of the commercial terms with approval rights over certain matters of the business as opposed to a direct management agreement with the brand,” says Mike Devereux. “We work for the property owner, leveraging off the hotel brands.”