Last week, Rwanda hosted the Africa Hotel Investment Forum (AHIF) in Kigali, which brought together global investors and experts from the sector, as well as players from the aviation industry. The three-day conference attracted sector players to deliberate on future of the two sectors and the investment opportunities they present.
The meetings came at a time when the East African Community (EAC) and Rwanda, in particular, is wooing big international hotel brands to boost tourism and employment opportunities in the region.
The litmus test for this push, however, is shortage of key personnel in hospitality industry, as well as persistent supplies challenges, which players say are driving up the cost of operations.
Stakeholders say due to shortage of qualified staff in the country, they incur additional costs in foreign staff recruitment and training, noting that they have resorted to importation of food items, furniture and other materials that affect their budgets.
A cross-section of international hotel brands chief executives told Business Times that it is more expensive to establish presence in the region due to personnel shortages, and ready supplies of materials.
This could explain the limited presence of top brands despite the region’s tourism and hospitality sectors’ potential, experts say. For instance, at Radisson Blu Kigali that opened shop in July this year, about 85 per cent of the staff are first time hoteliers which management says required intensive training prior to the launch.
Elie Younes, the executive vice-president and chief development officer of Rezidor Hotel Group which owns Radisson Blu, said the firm had to conduct intensive training for staff prior to the opening to avoid mishaps.
“Before opening, we had to conduct intensive training for the personnel to ensure that they were all on the same level and could work anywhere in the world. This, of course, drives up the cost of doing business compared to other parts of the world, like Europe,” Younes said.
In other markets, there is a steady supply of labour trained to be internationally competitive, easing the entrance of global brands into such markets.
As a result of skills gap in the hospitality sector, other international brands have resorted to using their global presence to train new staff by moving them across their operations in different parts of the world.
Before it launched operations last week, Kigali Marriott Hotel sent new staff training and to gain experience in their various hotels across the world, including Dubai in United Arab Emirates and South Africa, according to Anthony Capuano, the executive vice-president and global chief development officer. He said this was meant to orient the employees on the “Marriott way of doing things” to ensure they can serve competitively anywhere in the world.
“With that (training) we were comfortable they would provide the quality of service we give anywhere across the world,” Capuano said.
Others, like Hilton Hotel, which has presence in the region in Kenya, Uganda and Tanzania, and is seeking to establish presence in Rwanda soon have resorted to building partnerships with local institutions in countries where they have presence to ensure steady supply of qualified staff.
Hilton Hotels and Resorts senior vice-president for Europe, Middle East and Africa, Patrick Fitzgibbon said in African markets where they have presence, the hotel works with local partners to ensure constant supply of qualified personnel.
“Service orientation goes down to the kind of education people have and early orientation. We have been trying to do this by working with local consultants and hospitality firms to develop and utilise training programmes for potential staff in our markets,” he said.
Local suppliers’ headache
Besides the shortage of skilled personnel in the local market, hoteliers face persistent challenges while sourcing quality materials and consumables, like chicken, beef, fruits and vegetables, within the region. This means that operators have had to import such materials, including furniture, which are not readily available in the country or in the region. This has partly resulted in high levels of financial leakages, whereby a significant chunk of tourism receipts go outside the country and the region, generally.
A 2015 study by Rwanda Development Board and the UN Economic Commission for Africa showed that local tourism industry was increasingly characterised by high levels of imports leading to high revenue leakages.
Andrew McLachlan, the Rezidor Group senior vice-president for business development for Africa based in South Africa, said governments in the region have identified this challenge and provided tailor-made solutions, such as waiver of duties and imports for supplies of materials for the industry.
“Other governments in the region, such as Kenya, have tailor-made incentives, including tax holidays, to reduce the cost of opening a business in the hotel industry,” he said.
In Rwanda, the government last year revised the investment code which gives tax holidays of up to seven years for projects investing more than $50 million in energy, manufacturing, tourism, ICT and health sectors.
McLachlan said this model is ideal as it helps cut costs when opening new establishments in the region, adding that it also gives operators time to break even after incurring high costs during the development stages.
The operators say, in coming years, they expect this to change, as more local producers improve quality to benefit from these opportunities.
Patrick Fitzgibbon of Hilton Hotels said in recent years they have been working with suppliers, which has enabled more local suppliers to meet the quality of goods and services required by the brand.
Victor Kgomoeswana, an African business and investment consultant, said the backlog in the various sectors should present an opportunity for investment in the region. Going forward, he said, local, regional and international investors can make the most of the challenges by bridging the gaps in demand.
Locally, the vice-chairperson of the Chamber of Tourism at Private Sector Federation, Francine Havugimana, said training of the hospitality sector personnel is emerging as an investment opportunity which investors take advantage of. With the entrance of the multiple brands, she said, there is a huge demand for training staff in the sector.
Already, international hospitality training colleges such as Vatel, a French varsity, have begun tapping into the opportunity. The Ministry of Education accredited Vatel International Business Hotel and Tourism Management a few months ago to offer undergraduate degrees in international hotel management.
The French institution has over 30 years experience in training hospitality and tourism industry professionals, and has 28 campuses across the world, including in Paris, Los Angeles, Buenos Aires, Singapore, Switzerland, Moscow, Montreal, and Mauritius.Follow https://twitter.com/ByCollinsMwai