Global hotel giant Marriott International has signed a letter of intent to buy Protea Hotels, that operates or franchises 116 properties on the continent, including five in Namibia.
Protea Hotels Fürstenhof, Walvis Bay, Pelican Bay, Ondangwa, and Zambezi River Lodge are all included in the deal. The deal is likely to make Marriott the biggest hotel firm in Africa, an increasingly competitive market for global operators. “The development cycle for opening new hotels in Africa is typically long, due to the challenges posed by emerging infrastructure,” Alex Kyriakidis, Marriott International’s president for the Middle East and Africa said. “Joining forces with Protea Hotels and their highly respected management team is the strongest way to jumpstart Marriott’s footprint in Africa,” he said.
Marriott said that it hoped to close the deal to buy Protea Hotels by the first quarter of next year. The proposed value of the deal has not yet been made public. Protea Hotels, which is owned by the Protea Hospitality Group, encompasses three separate brands, with 80 properties in South Africa, and further hotels in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia. The deal will nearly double Marriott’s presence in Africa, to more than 23 000 rooms.
As part of the transaction, Protea Hospitality Holdings would create a property ownership company to retain ownership of the hotels it currently owns, and enter into long-term management and lease agreements with Marriott for these hotels. It would also retain a number of minority interests in other Protea managed hotels. At closing Marriott would manage approximately 46% of the rooms, franchise approximately 40% of the rooms, and lease approximately 14% of the rooms.
Arne Sorenson, president and chief executive officer of Marriott International, said, “Africa has significant untapped potential for travel and tourism, both as a destination and source of new global travellers. The continent’s GDP is anticipated to grow at over 5% annually over the next several years, which we expect will raise more people into the emerging middle class. With the Protea Hotels acquisition, our expanded footprint should allow us to become the first choice of Africa’s rapidly growing population of young, sophisticated travellers.”
The otherwise non-binding letter of intent includes provisions that the parties will negotiate exclusively with each other.