African countries are becoming increasingly open to visitors from across the continent, with most countries making “steady progress” in terms of visa openness, according to the Africa Visa Openness Index presented by the African Union Commission and the African Development Bank at the Africa Investment Forum (AIF) in Johannesburg last week.
Chinese hotel giant Jin Jiang accelerates its African expansion
The Shanghai-based hotel group Jin Jiang, a majority shareholder of Radisson since February 2019, is now the third-largest hotel group in Africa, behind Accor and Marriott International.
Though the name Jin Jiang International is not well known outside its home country, the Chinese hotel conglomerate has made dazzling progress in the global hospitality industry in recent months.
- Jin Jiang is now the world’s second-largest hotel group behind US-based Marriott International, and has been making huge investments on the African continent.
- The Hong Kong-listed group boasts close to 7,000 hotels in its China portfolio and generated a turnover of about ¥19,759bn ($3bn) in 2017.
Four years after acquiring French hotel chain Louvre Hotels Group (LHG), the Chinese state-owned hotel group completed a $2bn acquisition in February 2019 that made it the majority shareholder of Stockholm-listed Radisson Hospitality AB, Radisson’s subsidiary in Europe, the Middle East and Africa. With this operation, Jin Jiang became the third-largest hotel chain in Africa with 115 hotels, behind France’s Accor (of which it is the largest shareholder, with 12% of the capital) and Marriott International.
But, from Dakar to Kigali, it is likely that this change in ownership will go unnoticed. Similarly, Radisson clients probably have no knowledge of the fact that the Minnesota-based group was previously owned by another Chinese conglomerate, HNA, which was forced to dispose of the global chain in just over two years after its takeover, due to a record debt pile.
According to Radisson’s managers, the most important thing now is the opportunity this partnership offers the brand to intensify its regional expansion.
“This will give us new ways to broaden our Africa scope, and we will also benefit from the links China has developed with Africa,” says Ramsay Rankoussi, Radisson’s vice-president of development for the Middle East, Turkey and francophone Africa.
Radisson’s teams were further assured when the new shareholder endorsed their Africa strategy, which aims at doubling the hotel portfolio in francophone Africa by 2022.
- Currently, the group has 45 functioning hotels and 51 in development in 31 countries, of which 70% of are under its high-end Radisson Blu brand.
- According to a report from W Hospitality Group, an international firm specialising in hotel development activity in Africa, Radisson and Hilton were the fastest-growing hotel brands in Africa in 2018.
Pierre-Frédéric Roulot, CEO of LHG and of Jin Jiang Europe, says there is no need to go back to the drawing board when business is booming. “Jin Jiang purchased Louvre and Radisson for their operational quality and brand concepts, which can be exported anywhere in the worldwide, including to Africa,” says Roulot, who is also the head of Africa business development for the Chinese giant.
There will be more than 100 million Chinese travellers worldwide in 2020
When Jin Jiang took over LHG in March 2015, it also decided to accelerate its development strategy on the continent. Present in the high-end segment through its Golden Tulip brand – 45 hotels in 14 African countries – and popular with business customers, the group is currently diversifying its portfolio.
In September 2018, LHG opened a 411-room hotel complex in Casablanca under its three mid-range brands (Campanile, Kyriad and Première Classe). In January 2019, it also acquired TemptingPlaces, a high-end hotel label with 105 boutique hotels in 31 countries.
“We have a strong presence in French-speaking Africa but not enough in East Africa,” says Roulot, who is targeting Senegal and Cameroon this year. South Africa is “a key market to consider,” he adds, and LHG is currently looking for a local partner to spearhead the group’s expansion in the region.
But Roulot’s first priority is to ensure Radisson is smoothly integrated into Jin Jiang’s existing structure. “We now have to fully master this external growth,” says the CEO, who was a director at McDonald’s before joining LHG. “We have to first develop synergies between the IT arm in order to reduce costs and increase data consistency and the main branch of the central booking office in China. Having 10,000 hotels allows us to offer the best possible prices to our clients and investors,” he adds.
Jin Jiang is therefore expected to include Radisson in its loyalty programme, increasing its membership from 17 million to 120 million members. And attracting Chinese clients will be a major target moving forward, as data has shown that Chinese travellers worldwide will exceed the 100 million threshold by 2020. When Morocco eased visa restrictions for Chinese nationals in 2016, the number of travellers jumped by 378% within six months, according to a study by travel trends analyst ForwardKeys.
“Chinese tourists represent only 10% of our clients in Africa, but it is 10% that the others do not have. We are therefore in the best position to attract more of these clients,” says Roulot. The group’s potential Chinese customers are mainly businessmen who work on infrastructure projects and have to make regular round trips in and out of the continent, as well as holidaymakers, many of whom stay on the African coasts like Zanzibar.
In order to tap the vast customer base in the world’s biggest economy, LHG has been working with Jin Jiang Travel, the Chinese group’s distribution platform, for the past 18 months. The platform, which includes online travel agency WeHotel, is used by a third of Chinese customers for their hotel bookings.
The group has adapted its offer to meet the needs of the local clientele, offering texts available in Mandarin, kettles and tea in rooms, and Chinese-language television channels and newspapers. It also accepts payment methods common in China: UnionPay bank cards as well as payments for reservations made on the Alipay and WeChat Pay platforms that are hugely popular in China.
In addition to the LHG and Radisson brands, Jin Jiang also wants to promote its own brands in Africa. Roulot is spearheading the global launch of the four-star Metropolo brand, which is highly patronised by Chinese businessmen. He says the ultimate goal now is to have an establishment in each major African city, similar to having “one Chinese embassy per [African] capital”.
This article was first published in Jeune Afrique.
[CORRECTION: This article originally incorrectly suggested that Roulot’s first priority is to ensure Radisson is integrated into LHG’s existing structure, rather than into Jin Jiang’s existing structure. The error came from our translation, not from the original author.]