Hospitable place for Chinese investment

Chinese companies are looking beyond concerns of the moment to see the big potential of Africa's hotel industry

Chinese investors are confident about the hospitality and property markets in Africa and plan to keep spending money there despite the decline of international arrivals due to the Ebola outbreak and terrorist attacks in some regions.

Zhongfa Sinodevelop Technology, a group involved in electronics, trade, travel, hotels, real estate and the Internet, decided to invest in the hospitality industry in Kenya in 2010 and now has two hotels in the Masai Mara National Reserve and Amboseli National Park.

Their hotel in Amboseli covers 60 acres and opened in March 2013 with 60 rooms. The second hotel is on 25 acres, with 78 rooms, and opened early this year. Each hotel was built at a cost of 30 million yuan ($4.9 million).

Kenya experienced a decline in visitor numbers in 2013 when 1.49 million came to the country - 290,000 less than in 2012 - mainly due to safety concerns. A terrorist attack at the upscale Westgate Shopping Mall in Nairobi in 2013 killed 67 people. The Kenya Tourism Board says international arrivals in the first five months of 2014 dropped from 398,000 last year to 381,000, down 4 percent.

With the latest numbers still pending, the effect of West Africa's Ebola epidemic, though relatively far from Kenya, is believed to be even greater.

Zhongfa Africa, however, plans to expand. The Amboseli hotel is adding 38 rooms. Meanwhile, the construction of a third hotel in Kenya is scheduled to start in December. Located in Masai Mara as well, the new hotel will be a luxury lodging catering to the high-end segment.

"Tourists will take flights to the hotel instead of suffering the bumpy road from Jomo Kenyatta International Airport to Masai Mara," says Zhang Hongtao, director of Zhongfa Africa.

The company also is considering building another high-end hotel, mainly aiming at the local wealthy community, on an islet at Meru National Park. "This hotel will offer luxurious wedding services," he says.

Minyoun Group, with hotel, property and financial investments, is also expanding to Africa.

Zhou Bangyun, vice-president of Minyoun Group, wrapped up a nine-day visit to Angola for market research on Nov 14.

One of the projects Zhou discussed with his local partners is building two complexes on capital Luanda's landmark Bay Boulevard. "There are many foreign companies in Luanda and they are in great need of office buildings. We plan to build high-end apartments in one of the two building complexes," Zhou says.

The company is also preparing to invest in two tracts of land in the AngoChi International Logistics and Commercial Park, near where the capital's new airport will be located.

While a building materials center has been built on the first tract of land, the planning of the second tract of land has been started. The company is considering building hotels to improve the meager hotel situation in Luanda.

"There are only a few high-end hotels in Luanda and the occupancy rate there is high, up to 70 percent to 90 percent. The price is high as well. A room costing 700 yuan in China goes for $700. The hotel industry has been underdeveloped, but, as more foreigners come to the country, the future of the industry looks quite prosperous," says Zhou.

Minyoun Group has started planning and design of their projects in Angola while waiting for approval of their investment plan from Chinese and Angolan authorities.

Zhou says his company plans to launch other overseas investments in the next five years, for which Africa will be a prime destination.

Though some areas in Africa are underdeveloped, the continent has a lot of resources and is developing rapidly. With the great demand for hotels, the potential of the continent's hospitality and property industries is huge in the long run, says Zhou.

houliqiang@chinadaily.com.cn

(China Daily Africa Weekly 11/28/2014 page8)