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The main focus of this essay is the analysis of the article by Rodger Blitz and Javier Blas, Africa is New Battleground for Global Hotel Industry. The essay will discuss the key issues of the article and its relationship with the discipline of economics. Robert Blitz is a Financial Times writer on sport business and leisure industry, while Javier Blas is Africa editor at the same publishing office. Both of the authors has gotten economics rights and can be trusted. They tell the readers about the development of the hotel business in sub-Saharan Africa. The authors tell not only about bright prospect for the hospitality industry, but also explain the challenges that the investors are going to face. The settling of the well-known hotel companies such as Marriott, InterContinental Hotels Group, Hilton, Starwood will not be easy, and will take a long time and patience. However, the process will be organic. The given research will also include the relation of the article to the economics and the recommendation for the governments of sub-Saharan African countries in supporting native business, involved in the hotel industry.
Keywords: hotels, industry, sub-Saharan Africa.
Battle of Hotels
For the last decade, many countries of sub-Saharan Africa have been experiencing an economic growth. As a result, the infrastructure began to expand steadily, and many hotels have been built and upgraded. The process of expansion is still continuing. According to many experts, hotel business in sub-Saharan Africa has a bright future, though it will not be easy to do that business. The article by Roger Blitz and Javier Blas tells about opportunities of developing the hospitality industry for international companies. It also points to the challenges that the companies are going to face.
The Main Key Issues of Developing the Hospitality Industry
According to Blitz & Blas (2014) the sub-Saharan Africa is a new battleground for global domination among the companies involved in hotel business. The companies such as Hilton, Marriott, InterContinental Hotels Group are now fighting for promoting their brands in African Continent. Thus, this competition is going to be intense. Roger Blitz and Javier Blas compare this fight for economic share with the one that has taken place in Asia.
Another interesting observation made in the article is that the main target of hotel companies are not the tourists, but business travelers. According to the authors, a lot of business travelers are now going from one African country to another, visiting such capitals as Luanda, Lagos, Nairobi, Johannesburg and others. It brings to conclusion that business is now active in many African countries, and thus, it makes sense to develop the hotel industry all over the African Continent.
The economy of most countries of sub-Saharan Africa has shown a steady growth for the past decade. The International Monetary Fund predicts the economic growth in 2014 will be about 6%. It is rather high if compared with the global rate 3.6%. Of course, as the foreign business has become more active, the economic growth was stimulated respectively. Yet, the hospitality industry contributes to that growth as well. For example, in South Africa this contribution was considerable. According to Kamil Abdul-Karim, Managing Director of PAM Golding Tourism & Hospitality Consulting (2013), Durbans hotel sector has experienced the most impressive growth in the country at 26.7%, with Cape Town at 16.2% and Johannesburg at 9.1%.
Another important point of the article is that in some areas of sub-Saharan Africa, there is a much stronger need in business class hotel rooms than in others. For example, Luanda (Angola) and Ndjamena (Chad) are now among the most expensive cities for business travelers. In Luanda, it is difficult to find a hotel room of business class for the reasonable price, which is now around $500 per night. The companies, which are involved in hotel business, should take it into consideration.
The authors of the article also point that the organic expansion will not be easy due to the certain obstacles. A key obstacle is that Africa is split in 54 countries that have different legal systems and languages.
The authors have focused mainly on the future of the hotel industry in sub-Saharan Africa. As the businessmen from other countries became interested in doing their business in Africa, a need in 5-star hotels emerged as a result. However, they did not explain very well the reason why the foreign business was attracted to Africa. Perhaps, it was because of the rich natural resources of the African Continent. In so, it may also explain why the expansion is going to be organic.
The Articles Relation to the Discipline of Economics
The development of the hotel industry is closely related to the discipline of economics. First of all, it may involve a lot of investment into local economies. The economy of the countries begins to grow and that can be noticed in the increasing figure of GDP. According to Kimberly Amadeo (n.d.), GDP or Gross Domestic Product includes everything produced by all the people and all the companies in the country. It is an economic indicator that allows learning a total output of the countrys economy.
As the hotel industry expands, the number of jobs increases accordingly. People get new opportunities for their employment. As there come new jobs, there may also be a need in education or training. When hotel service reaches a better level, it in its turn, starts to attract more visitors, including business travelers. All these factors contribute to the economic growth and the increase of the standard of living. According to The Free Dictionary (n.d.), Standard of living is a level of material comfort as measured by the goods, services, and luxuries available to an individual, group, or nation.
The standard of living in sub-Saharan Africa is likely to increase. The article of Roger Blitz and Javier Blas has highlighted Africas economic standing. There will be built numerous hotels, especially in the capitals of the African countries. Though the authors focus mostly on hotel industry, while reading their article, one may anticipate the approaching impact on the African economy and people. It is easier to understand what this impact is about after reading the note by the former head of the World Bank, Robert B. Zoellick (2011),
I suggest it is now time for the World Bank to examine, with its Board and shareholders, whether the bank needs new capabilities or facilities that could leverage support from countries, foundations, and others to strengthen the capacity of CSOs working on accountability and transparency in service delivery. We could give priority to countries in the Middle East, and North Africa, and in sub-Saharan Africa. We could back this work with seed capital, and with knowledge exchange and research aimed at improving the enabling environment for social accountability.
By receiving a lot of those investments, sub-Saharan Africa may become quite dependent on the foreign investors. It will be very difficult to compete with them for native African investors. However, if the governments start supporting their native investors in hotel industry financially and in legal ways, they will probably be able to compete with foreigners.
As the companies involved in hotel industry settle their business in sub-Saharan Africa, it will certainly cause a further economic growth and the increase of standard of living. However, the governments should be careful in their decisions and give the priority to the native companies. The globalization process may consume an economic independence of the African countries if the preventive measures are not taken in time.