Consolidation: the key to climbing in global hospitality

BON Blog - Consolidation

This week the news broke that BON Hotels has been acquired by international hospitality group, ONOMO Hotels, making us one of the biggest hospitality groups on the continent. We’re now the mid-scale pan-African hospitality group leader.

As we celebrate this momentous step, it has reminded me of a speech I gave at a hospitality conference in 2018. My key message was around the need for the Southern African hospitality sector to consolidate. Back then, all around me I was seeing international groups snatching up properties in competitive areas like Cape Town, Durban and the Kruger National Park - all the time wondering why African companies weren’t making these smart moves.

I think in large part it’s because African companies don’t have the advantages that global capital brings. So how do we overcome this? Consolidation is key and that’s exactly what we’ve done with the acquisition deal.

As it stands, there are over 75 hotel groups countrywide who operate 984 hotels and lodges. Of these groups, only 12 have a footprint of eight or more hotels. All of these little groups or individuals are cannabilising each other, fighting for a piece of the pie.

Why aren’t we as African hotel groups working together to strengthen our offering and cement our place in the tourism industry? The biggest players in Africa have traditionally been Marriott International, City Lodge, and Tsogo Sun, who operate over half of the properties that exist. Why aren’t the rest following this pattern?

If regional groups don’t band together to form strong entities, we run the risk of international groups dominating the industry across the continent. I worry that if we don’t do this, international groups will benefit from first-move advantage for opportunities that exist right on our doorstep.

I’m not saying that consolidating is a clear or easy path. It took us months of negotiations with ONOMO Hotels to reach a conclusion to our deal. But it was worth it because we can now benefit from each other’s experience and expertise. We have increased buying power and we’re in a stronger position when it comes to contracts. We can also benefit from economies of scale and really function as an international hotel group. Plus we can start benchmarking against international standards which improves our continent’s tourism offering overall.

Consolidation is not only great news for small groups and hotel owners, but also for our continent. The stronger our groups are, the better our hospitality offering, and the bigger the impact on tourism and the economy. In South Africa for example, we know that tourism is increasingly important for our economic survival. So we need to think strategically about how we can ensure that this industry not only survives, but thrives.

Author

Chief Executive Officer

Having grown up in the corridors and reception areas of Cape Town hotels, Guy Stehlik is no stranger to the hospitality industry.

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