Africa's Hilton: Azalai Hotels

Timbuktu: Mali's famous export

Mali is more famous for Timbuktu, the Sahara Desert, and the Dogon People. Perhaps these things helped the Azalai Hotels Group in its rise towards becoming Africa’s own Hilton hotel chain, yet the Azalai Hotels also deserve a mention as a famous Malian export in their own right.

Afropolitans are on the rise, using Asian, European and American capital to invest in African opportunities. The rush of Chinese capital, goods and labour into Africa as well as Chinese demand for African resources is boding well for the continent. Trade between Africa and China increased by 20 times since 2000, valued at US$206 billion in 2012. Investments bounds for Africa have also increased due to the search for yield as opportunities have shrunk in debt-laden Europe and a slower-growing America. A variety of factors are making the African continent more attractive to investors. 7 of the world’s fastest-growing economies are now in Africa. Sub-Saharan Africa’s population is around 900 million now and projected to reach 2.1 billion by 2050, the fastest growing region worldwide. Furthermore, the African continent currently has the youngest population with 40% of people under the age of 15. McKinsey have assessed the value of consumer industries including retail, telecoms, tourism and banking in Africa at US$620 billion by 2020, 51% of the revenue increase for all African industries. These factors all portend the emergence of a middle-class in Africa intent on acquiring and experiencing the same luxuries that the European, Asian and American middle-class have already been enjoying. Some multinational companies are already tapping into the continent:

Afropolitans Rising?

·         Walmart, the world’s largest retailer, acquired South African Massmart for US$2.4 billion;

·         Procter & Gamble spent US$27 million developing a soap factory in Nigeria;

·         L’Oreal have implemented measures to increase African revenues by 20% annually by targeting Africa’s burgeoning middle-class.

In Ouagadougou, Burkina Faso

Enter Azalai Hotels. Founded in 1994, it is the first privately owned hotel chain in West Africa. It now has six hotels in five countries – Mali, Benin, Senegal, Burkino Faso, and Guinee-Bissau. Altogether there are 700 rooms in three and four star hotels that target the business traveller market with guests paying £50 to £90 a night. The Azalai Hotels Group is valued at around £50 million, employing 800 people. A privately-held African company, 90% of the company is owned by one family and the remaining 10% owned by specialist West African venture capital fund Cauris Management. 2012 saw revenues of £12 million, down 8% from 2011 due to the Islamist insurgency in Northern Mali and the counterattack by the French. Azalai Hotels Group have shrewd management in the form of American and French educated Mossadeck Bally, CEO and founder of the Group, who was named African Businessman of the Year in 2011 by the African Development Bank. The Group also has plans to expand with three hotels being developed in Abidjan, Dakar (Senegal), Timbuktu and Conakry (Guinea) with further plans to target Niger, Togo and Nigeria. This geographical diversification should protect investors’ money despite corruption, potential government interference, and political instability in West Africa.

This is an opportunity to invest in a high-growth business despite it facing adversity. With plans to list on the Abidjan stock exchange in the commercial capital of the Ivory Coast, it will soon be possible to acquire shares in West Africa’s only privately-owned hotel chain, a veritable Hilton one day.