Se­ri­ous about Africa

Business Traveller (Africa) - - Q&A - Chris Nasetta Pres­i­dent & CEO Hil­ton

Hil­ton has a re­newed fo­cus on Africa, and a year on from un­veil­ing its Africa Growth Ini­tia­tive, which com­mit­ted $50 mil­lion over the next five years to the group’s ex­pan­sion of its Sub-Sa­ha­ran African port­fo­lio, Pres­i­dent & CEO Chris Nas­setta was in Nairobi for the Africa Ho­tel In­vest­ment Fo­rum, where edi­tor Dy­lan Rogers was able to grab a few min­utes of his time to dis­cuss – among other is­sues – Hil­ton’s new ‘Big Five’ project.

Q: What are your thoughts on the de­vel­op­ment space in Africa?

A: I like what I see. We've built mo­men­tum over the last 60 years and we now have just over 40 ho­tels in oper­a­tion. Hil­ton was, if not the first, then among the first in­ter­na­tional brands on the con­ti­nent, but the re­al­ity is that we didn't pur­sue Africa ag­gres­sively. Where pre­vi­ously de­vel­op­ment hap­pened out of Lon­don, we now have de­vel­op­ment and op­er­at­ing teams on the ground. Africa has been iden­ti­fied as one of the most im­por­tant emerg­ing mar­ket growth op­por­tu­ni­ties. But growth takes mo­men­tum, which takes a long time to build. When I joined Hil­ton 11 years ago we had a small pipe­line, and in the next five years we're go­ing to dou­ble our pres­ence. It's good, but not good enough. If you look at the pop­u­la­tion cen­tres and their growth, not to men­tion in­bound tourism that is set to dou­ble or even triple in the next 20 years, this is where much of the ac­tion, in terms of growth, will hap­pen.

Q: Would you say the Hil­ton Africa Growth Ini­tia­tive is sig­nif­i­cant in terms of Hil­ton’s view on Africa?

A: We would con­sider eq­uity in some cir­cum­stances. We own 60% of the Nairobi Hil­ton, a deal we did 50 years ago. We are cap­i­tal­light but we're in­ject­ing cap­i­tal in other forms. The net re­sult is the same; in­vest­ment is in­vest­ment, a dol­lar's a dol­lar. No mat­ter what you call it, $50 mil­lion is $50 mil­lion leav­ing our pocket and go­ing to help some­one else and bridge eco­nom­ics where nec­es­sary.

Q: Is Hil­ton as se­ri­ous now about Africa as it’s ever been?

A: I'd say we're more se­ri­ous than ever be­fore. It's not that peo­ple

weren't se­ri­ous about it 50 years ago, but we weren't as se­ri­ous about hav­ing a broad net­work.

I am con­vinced that a net­work ef­fect mat­ters. Be­ing able to serve more cus­tomers' travel needs in the places that they want to visit builds loy­alty. But that re­quires dif­fer­ent prod­ucts and price points and a lot of dots on the map. The more op­por­tu­ni­ties we can of­fer, par­tic­u­larly in Africa, the more of a net­work ef­fect we cre­ate. The net­work ef­fect is ben­e­fi­cial to the eco­nom­ics and mar­ket share of our busi­ness in Africa, but also to our global mar­ket share be­cause so many peo­ple are global trav­ellers. If you want loyal pop­u­la­tion of trav­ellers, you have to start by build­ing a busi­ness at home. At their home. So that when they leave their home, wher­ever they're trav­el­ling, they have a known and trusted net­work to plug into. You've got to put dots on the map and keep your prod­ucts and ser­vices at a level that con­tinue to please.

Q: Why is the mid-mar­ket seg­ment in Africa such a hot topic at the mo­ment?

A: Very sim­ply: eco­nom­ics. The law of sup­ply and de­mand. More of the de­mand for travel is com­ing from the mid­dle class, which are the largest parts of any pop­u­la­tion, and what they can af­ford is mid-mar­ket, mid-scale brands. Even in the more ma­ture mar­kets of Europe and the United States, the growth is com­ing from mid-mar­ket.

Q: Will the Hamp­ton brand be com­ing to Africa?

A: It will, but not yet. There are a cou­ple of se­lect deals that we're work­ing on where we think it makes sense. But we will not roll out Hamp­ton on a broad ba­sis any time soon. We need to build

more of a net­work ef­fect to make that work. So we'd rather sup­port the Gar­den Inn brand un­til it's a strong net­work. We cur­rently have two of th­ese prop­er­ties up and run­ning, with 16 more com­ing. We want to cre­ate a greater aware­ness of the HGI brand and build up some loy­alty, and then we'll think about Hamp­ton Inns.

Q: What was the think­ing be­hind Hil­ton’s Big Five ini­tia­tive?

A: This ini­tia­tive ad­dresses some of the chal­lenges that Africa, and the world, face. The op­por­tu­ni­ties ahead of us in this in­dus­try are spec­tac­u­lar, but there are also risks that we need to mit­i­gate. The great­est risk is an un­sus­tain­able ap­proach to the busi­ness. That we don't take care about the en­vi­ron­ment. That we're not great stew­ards of our des­ti­na­tions. That we don't at­tract and re­tain the right types of peo­ple, par­tic­u­larly young peo­ple, in or­der to do what we do best and de­liver great ex­pe­ri­ences for cus­tomers. Our Big Five is a fol­low-on to our 2030 global goals, which is to halve our en­vi­ron­men­tal im­pact and dou­ble our so­cial im­pact. The Big Five is a play on Africa's Big Five, but if you look at the in­di­vid­ual parts, it's a di­rect fol­low-on of halv­ing en­vi­ron­men­tal and dou­bling so­cial im­pact. The wildlife one is fairly spe­cific, since it's a huge rea­son for peo­ple to visit Africa. If we're not work­ing to­gether as stew­ards, there won't be as many rea­sons to come to Africa. Which is not good for any­body, es­pe­cially the African coun­tries. ■

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