AccorHotels is joining forces with Qatar’s Katara Hospitality to create a $1 billion fund to invest in sub-Sahara Africa, Europe’s biggest hotels operator said on Monday.
Rivals Hilton Worldwide Holdings Inc and Hyatt Hotels & Resorts are also taking aim at Africa where the International Monetary Fund (IMF) has forecast economic growth in sub-Saharan Africa of 3.4 percent this year, up from 2.8 percent in 2017.
The Accor/Katara fund will include up to $500 million in equity with Katara, the hospitality arm of the Qatar Investment Authority (QIA) sovereign wealth fund, investing $350 million and Accor $150 million over 5-7 years.
The QIA is Accor’s second largest shareholder with a 10.17 percent stake and the chairman of Katara Hospitality, Sheikh Nawaf bin Jassim bin Jabor Al-Thani, is on the board of AccorHotels.
Accor is expanding in emerging markets and in luxury hotels and investing in areas such as concierge services to better meet the challenge posed by companies such as Airbnb and online travel agents.
The investment fund will target around 40 hotels across a range of Accor brands from economy to luxury hotels, including residences, as Accor seeks to cater to growing demand from business travellers.
“Having been present for over 40 years in Africa, we also know that there are increasing and sizeable needs for quality hospitality,” said AccorHotels chairman and chief executive Sebastien Bazin.
“Through this fund, we will match the expertise of Katara Hospitality together with AccorHotels’ world leading brand portfolio to accelerate our dynamic growth trajectory in the sub-Saharan region,” Bazin said.
Accorhotels, which operates 114 hotels in Africa including 43 in sub-Sahara Africa across 15 countries, announced last year that it would open three more in Ethiopia by 2021.
Hyatt plans six new hotels in Africa by 2020, initially moving into Algeria, Cameroon, Ethiopia, and Senegal. Hilton plans to spend $50 million over the next five years to fund expansion.
Accor bought a 50 percent stake in U.S. mogul Sam Nazarian’s upmarket SBE Entertainment Group last month, and has expressed an interest in buying a minority stake in Air France KLM .
Previous Accor acquisitions include London’s Savoy Hotel, The Plaza in New York, the Raffles Hotel in Singapore and Australian hotel group Mantra. (Reporting by Sudip Kar-Gupta, Dominique Vidalon; additional reporting by Joe Bavier; editing by Mathieu Rosemain and Jason Neely)