Marriott International Inc. concluded a deal this week to buy Cape Town-based Protea Hospitality Holdings for about $200 million, according to a Bloomberg report in BusinessWeek.
The transaction, announced in January, almost doubles the Bethesda, Maryland-based company’s rooms in Africa to about 23,000 and will help it expand further in the region. A growing African middle class and rising travel are fueling the fastest pace of hotel development in the world, Bloomberg reports.
The world’s second-largest publicly traded hotel company, Marriott said it
will continue expanding in Africa following the Protea purchase.
Arne Sorenson, CEO of Marriott International Inc., talked in a Bloomberg video about the company’s Protea purchase, and whether or not it is considering selling Protea anytime soon.
“There’s a big difference between buying a company like Protea and buying a single hotel asset,” Sorenson said. “The hotel assets we invest in, we invest in temporarily. Almost all of them we will turn around and resell to long-term real estate investors.
“Our business is really not to be in the real estate investment business but to be running hotels. The Protea deal in comparison, we’re buying an operating company in sub-Saharan Africa. We’re really thrilled to be entering that market in a big way and Protea, we will never sell. They are assets we will keep forever.”
Marriott has 25 Marriott-brand hotels under construction in seven countries in Africa that will come on stream over the next four years, according to Alex Kyriakidis, Marriott president for the Middle East and Africa. In a Bloomberg interview in Cape Town, he said the new hotels “are going to bring us into Benin, Gabon, Ghana, Ethiopia and Mauritius. With our existing hotels plus those in the pipeline and those Protea operates today we will be in 16 countries in Africa by 2017.”
Protea manages, franchises and leases 79 hotels in South Africa and 37 in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia. Marriott operates or franchises more than 4,000 hotels in 79 countries, according to an e-mailed statement from the companies. Marriott shares have gained 15 percent this year, valuing the company at $16.78 billion, Bloomberg reports.
Protea hotels will be marketed on Marriott’s global distribution platform and exposed to its 42 million loyalty-program members, Kyriakidis said.
“All the hotels stay as is,” Kyriakidis said. “Our mission here is to grow, grow, grow. Since we announced the deal a number of major investors in South Africa are already in discussion with us about projects because they are comfortable we have got real presence in the country to support them.”
