How Do You Raise Funds For A Hotel Development in Africa?
Even though GetFunded Africa is still in pre-launch phase and only recently started circulating our “Daily Digest” (a snapshot of news articles related to funding rounds of organizations in Africa), we have been getting some interesting questions related to fundraising for different industries.
Today, we decided to treat a question from one of our subscribers who wants to raise US$8 million for a hotel in a tier 2 city in South-West Nigeria. (This is an opportunity for us to plug in some self promotion :-), if you haven’t already, subscribe to GetFundedAfrica’s Newsletters here.
Big Opportunity For Small Hotels in Africa
Whilst high profile branded hotels still dominate the market, the reality is that hotel investment is a big risk for financial companies to bear. So there is a trend in lenders being approached for funding for smaller scale hotel projects, like economy and midscale properties.
These projects are seen as carrying much less risk because they have a much lower cost basis, which can make it easier to get hotel financing. In fact, independent hotels are becoming increasingly popular with travelers, and in some markets, they are actually outperforming “flagged” (franchised) hotels.
Hotel Investors In Africa
Based on the above, GetFundedAfrica has listed a few investors interested in hotel investment projects in Africa. You can reach out to them directly or you can contact GetFundedAfrica’s Consulting arm to do an introduction (For a fee)
Dioser is a specialist real estate investment company focused on investing in hotel properties in Africa. Dioser targets African key locations which enjoy high tourism, business and exhibitions. Dioser invests in markets that offer favorable fundamentals that will support profit and growth in the foreseeable future. Dioser prefers hotels are operated by international renowned chains through a management contract.
International Finance Corporation (IFC)
IFC seeks to develop critical infrastructure in places where there is often a lack of international standard hotels. These investments send a positive signal to other investors and are often among the first private sector investments in a transitional economy. They are an effective way to help establish a conducive environment for investment, and to create mixed-use developments and real estate venues for international conferences. IFC’s long-term perspective and flexibility is particularly relevant for hotel investments which, by their nature, require long-term financing, long grace periods and flexible financial instruments.
Rotana are not real estate investors, but they can mobilize funds for hotel construction from the Middle East. There is growing interest from the middle-east in real estate projects in Africa but developers need to show that the location is a viable one (eg events held in the city, tourism locations etc).
Want More Investors?
Want to learn about even more hotel investors? GFA is putting together a compendium of hotel investors in Africa and this will be released at the end of April 2020. It will include companies and contacts, video interviews and a breakdown of hotel investors by location.
The hotel investor compendium costs $750. If you are interested in reserving a copy, send an email to firstname.lastname@example.org
Hotel Investment Events – London 5th – 7th May
It may also interest you to know that you can connect with hotel investors at the AFSIC “investing in Africa” event in London in May, 2020. You can find event details here.
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