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CityBlue leads local developers in sub-Saharan Africa

Founder and CEO of Dubai-based Diar Capital Jameel Verjee launched his mid-market CityBlue hotel brand in Rwanda in January 2013 and today has an asset-light portfolio with three open, four more coming this year and four next year. That makes it among the fastest-growing domestic players.

The owner of the Urban by CityBlue and CityBlue Hotel & Suites brands across sub-Saharan Africa is now appearing in top 10 lists of hotel development pipelines across Africa and continues to work with even more owners and local communities across the continent. HOTELS asked Verjee about his business and its potential.

HOTELS: Are you strictly developing in sub-Saharan Africa?

Jameel Verjee: The concept began in Rwanda and has now criss-crossed East Africa. Our plan is to next enter Zambia, Botswana, South Africa, Mozambique and Swaziland. Our vision remains to focus on being Africa’s recognized indigenous brand with an offering focused on location, affordability, service and technology.

H: What are the hot and cold spots for development?

JV: Ethiopia is hot: huge population, very few good hotels, and they are all very expensive. Kenya is cold: Nairobi is now over-stocked with hotel bedrooms and more than 2,000 keys are set to hit the market over the next two to three years.

"In my capacity as an entrepreneur, the gap was clear and we began with a view to emulate the likes of Home Inns in China – open hotels regularly and consistently, in our case across sub-Saharan Africa." -- Jameel Verjee
“In my capacity as an entrepreneur, the gap was clear and we began with a view to emulate the likes of Home Inns in China – open hotels regularly and consistently, in our case across sub-Saharan Africa.” — Jameel Verjee

H: Are secondary cities among the best plays right now?

JV: We just opened the CityBlue Epic Hotel & Suites in Nyagatare, eastern province, Rwanda. This property serves to emphasize how secondary cities are benefitting from tens of millions of dollars of investment and can still produce the returns commensurate with the expectations of the investment community.

H: Where is the next hot spot?

JV: There have been many announcements of new openings in Zanzibar, but very little actual activity. The island is currently enjoying popularity given Mombasa’s recent troubles, but it remains a work in progress. We have a close eye on Mozambique, Botswana, Namibia and Zambia. These markets do not make much noise but they can make excellent returns for investors.

H: Anything else to share?

JV: In my capacity as an entrepreneur, the gap was clear and we began with a view to emulate the likes of Home Inns in China – open hotels regularly and consistently, in our case across sub-Saharan Africa.

 

 


 

In a nutshell

W Hospitality’s Trevor Ward and JLL’s Xander Nijnens assess key African markets:

South Africa

In the doldrums with more political turmoil ahead; upturn in pipeline activity as the oversupply created by the 2010 FIFA World Cup has been absorbed. Mozambique was supposed to be big, but is on the naughty step because of fibs about loans taken by government. In Angola, it is so difficult to do business, the economy is in free fall and AccorHotels has a huge 50-hotel deal, which is really all that’s needed. Angolan capital Luanda could be oversupplied with non-branded hotels – several are “under construction” and some of those are stalled.

Central Africa

There are opportunities in Cameroon, but much talk and little action. It is a difficult place to do business.

West Africa

There are still massive opportunities in Nigeria, including many of the secondary cities, but it will take time for economic recovery to come through (recovery in oil prices would help), and for the impact on devaluation of the naira to work out. It imports everything and, therefore, the price of building a hotel is double what it was three years ago. Ghana has some prospects in cities like Tema and Kumasi, but lots of supply coming up in Accra. Hot spots are the Ivory Coast and Senegal, although there are multiple projects in Dakar. Sierra Leone has great tourism potential. 

North Africa

Algeria has great tourism potential on the Mediterranean coastline, if the political will were there. Morocco is all but “done.” Tunisia has a lot of supply planned for Tunis. Egypt has a huge development pipeline despite the problems because the product is just so terrific.

East Africa

Opportunities in the secondary cities of Kenya (Kisumu and Nanyuki) and Tanzania. Nairobi is oversupplied. Dar es Salaam hotels are suffering from a ban on any government business being held in hotels. Opportunities are in secondary cities. Djibouti is a tiny country with great potential as a new airline has just started. In Ethiopia, Addis is oversupplied, but there are opportunities in secondary cities. Uganda has great opportunities both in Kampala and elsewhere with great potential to increase safari and other types of tourism. In Rwanda, Kigali is oversupplied.

Indian Ocean

New airlift has opened up many new source markets. The challenging operating climate in North Africa is displacing beach tourism into the Indian Ocean. The beach and nature appeal of the Seychelles, Zanzibar, where airlift has improved, Mauritius and Madagascar are exceptional. There are very strong local and regional operators that deliver an excellent service experience, and there are trendy new beach destinations compared to the more established core in Asia.

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