Leading Ivestment Company in Africa

Will Tourism Advance Africa’s Socioeconomic Narrative?


How AFTCA and a pandemic world pose new opportunities for hospitality and tourism on the continent.
– Dupe Olusola, MD/CEO, Transcorp Hotels Plc

For the past decade, the African continent has shown a remarkable commitment to building a repository of investment opportunities across business sectors.

Tourism, for instance, has witnessed a spike in Cape Verde, sustaining its economy on hospitality efforts. Tourism contributes to 24% of GDP in Mauritius. In 2019, Ghana launched a viral campaign, The Year of Return, attracting globetrotters and foreigners seeking to reconnect with their roots. The Year of Return popularised Ghana as a tourist destination with Trans-Atlantic trade appeal, following a 5.5% contribution from the tourism industry to the nation’s GDP in 2018.

Before the pandemic, a hospitality report showed that Africa was the second-fastest growing tourism region globally, with a growth rate of 5.6% after the Asia Pacific, against a 3.9% global average growth rate. Now, with the number of travels per year on a decline as a result of the COVID-19 pandemic, conversations abound on whether domestic tourism numbers will begin to look up and how the Africa Continental Free Trade Area (AFTCA) will accelerate progress for regional tourism.

The AFTCA and Integrating local value chains

With a potential market size of over 1.2 billion people and a gross domestic product (GDP) of $2.5 trillion across all 55 member states of the African Union, much is to be expected from AFTCA, particularly in integrating African countries to drive up demand and supply for goods and services, as well as facilitate intra-continent migration.

The movement of people and goods will enable trade and create more valuable local opportunities. In Nigeria, family-owned investment company Heirs Holdings is further integrating its state of play to leverage these unfolding opportunities across Africa. An example of such is its strategic investment in the hospitality landscape – a sector dominated by hotels but is witnessing the emergence of new players and product offerings set to diversify and expand the sector. Digitally savvy consumers have fuelled the culture of lifestyle and hospitality, driving the adoption of experiential packages in the hospitality industry. This cultural shift enhances competition and opens opportunities for new entrants into the hospitality market. One such example is Aura, a new digital platform redefining hospitality in Nigeria, enabling people to book accommodation, restaurants, and experiences from their mobile devices. Launched by the hospitality investment arm of Heirs Holdings and one of Africa’s leading hospitality brands, Transcorp Hotels Plc –, it is the company’s pathway to boosting inter-regional participation in the tourism and hospitality sector.

The reduced dependency on international tourism is an opportunity to explore grassroots recreational outlets. Aura’s bold and targeted approach is to leverage the existence of homes, create traction for underrepresented small businesses, and showcase national heritage, through curated lifestyle and tourist experiences. Its ambition is to engage thousands of partners – from homeowners, hoteliers, restaurateurs, and experience providers to earn income by listing their properties or services on the platform, increasing economic growth and development while improving lives. With Aura, more local businesses will be better positioned to insert themselves in value chains, leading to increased income sustainability.

Addressing access in Regional Tourism

According to the World Tourism Rankings of 2019, there were 69.9 million international tourist arrivals to Africa. This statistic, according to the World Tourism Rankings of 2019, positions Africa as a much-desired destination for non-African travels. However, much is still unsaid about access to tourist destinations in Africa for Africans.

Inter-regional connectivity in Africa remains a challenge. A significant number of the African population still find it difficult to acquire visas. Enthusiastic tourists in Africa are exempted from the diverse experiences in neighbouring countries. Countries are unable to promote their local travel destinations and tourist offerings to attract more regional travellers.

One solution for this predicament will depend on policy adjustments within which Africans can begin to move toward regional integration. Africa is long overdue a flight hub in West Africa – particularly to address the challenge of ease and accessibility while travelling regionally. At present, TAP Air Portugal connects African travellers to Lisbon, São Tomé and Príncipe and Cape Verde, making the case for why more airlines need to expand their global route network operations in Africa. Alternatively, travellers sometimes must fly to Europe to connect to another country in Africa, with the same fate applicable to regional logistics, all of which have implications on trade activities.

Policy adjustments can also happen at the national level, the case of such being in Ghana, when, for the Year of Return campaign, it waived some visa requirements and passed amendments to a 2002 law that permits people of African origin to apply for a right to stay indefinitely in Ghana.

Another solution to boosting regional tourism is Intra-African trade: whereby regional organisations can facilitate cross-country tourist exhibitions and engage Africans on a regional level on what their neighbouring states have to offer. Such a move would weave a brighter future for a region that has repeatedly noted the urgent need to address its continent-wide connectivity gap.

Industry diversification: A new reality for hospitality players

Having suffered a loss of over $50bn in revenue in the wake of a changing society affected by the Covid-19 pandemic, tourism industry players face a new reality: how to recoup from these unprecedented losses, create more employment opportunities, and celebrate the dynamism on the continent.

Addressing the deficit in international travel demand in the wake of COVID-19, Transcorp Hotels was able to identify and enable new products that meet local hospitality needs. Recently, it launched several initiatives: a drive-through cinema, laundry delivery service and food delivery all with the aim of driving long-term returns and delivering premium consumer experiences. In addition, it launched Workspace by Transcorp Hotels – a business hub for corporates designed to boost business activities in a hospitable environment.

Pathway to recovery for Africa’s tourism & hospitality play

As African economies recover, new interventions in the tourism and hospitality sector will emerge to help address the impact of the pandemic and slow-down of growth. Digital products like Aura by Transcorp will augment efforts to move Africa toward an integrated market, as the continent has one of the fastest-growing mobile phone penetration rates. Similarly, it will provide a young African population and a growing middle class with leisure opportunities.

The AFCTA agreement is expected to boost about 50% intra-African trade between now and by 2030 – less than a decade. Achieving this will require a viewpoint that embraces local small and medium-sized enterprises. Indeed, the strongest outcome for the tourism industries in Africa will occur when key players diversify supply chains, establish regional value chains, and boost the growth of home-grown value-adding products. The hope is that with an enabling environment like the AFCTA, Africans can begin to embrace solutions developed to empower them socially and economically, just as regional economies spur growth and expand in capacity.

Culled from Business Insider