Overview of the actual inflation situation in West Africa

From a managerial perspective running a hospitality business is an amazing and vigorous journey, numerous challenges pop up daily due to internal operational factors and market conditions amongst others. However, a trojan horse that should be faced with the aim to puzzle the hotel profit and loss is the inflation. 

Depending on the region, the average consumer price inflation rate fluctuates in a wide value range. In West Africa the inflation rate rose from an average of 9.7% in 2014 - 2020 period to 12.7% in 2021 and 17% in 2022 (African Economic Outlook, 2023). In some countries, and taking the example of Nigeria the inflation peak rate forecast will reach 25.1% (see Graphic 1).

Image 1. Inflation rate in Africa at September 2023. Source: Trading Economics

Graphic 1. Inflation rate, average consumer prices (Annual percent change). Source: IMF, October 2023.

Over the past few years, the surrounding circumstances like the leap in price of transportation, food, petroleum, oil and gas resulted in a high cost of living, decreasing purchasing power and increasing costs for business with a negative impact in the economy backed up by inflation which by default triggered several changes within the hospitality industry.

The application of technology in the hospitality industry can help in reducing some of the negative effects caused by inflation. From hotel management companies, independent hotel owners and tourism & hospitality industry professionals amongst others could benefit from implementation from these new technologies as an ally in several areas as front desk, maintenance, finance, etc., to monitor cost fluctuation, implementing corrective measures and driving mechanism to enhance bookings maximizing profit and customer experience.

10 Digital Trends to support the Tourism & Hospitality Sector

As a hotel located in West Africa and operating under the aforementioned circumstances of inflation period, the importance to adapt the hotel business model in terms of implementation of new technologies is crucial due to the rise of tourism in West Africa in the short and medium term with some challenges that could be solved.  

Let’s not forget that West Africa is the biggest region in Africa with over 400 million people, rich in culture and tourist attractions. West African Countries generate the highest number of outbound travelers in Africa according to UNWTO, 67 million international tourists visited Africa, bringing in a total receipt of USD 38 billion in 2018 (pre COVID-19).

In reality West Africa is the region in Africa that receives the least number of tourists arrivals. For this reason, building bridges to strengthen the tourism situation in the region will be an important matter to boost international and domestic travel and compensate the loss of foreign tourist to the region due to the inflationary period experienced mainly in Europe. However, as an example it is observed that West Africa is the most expensive regions in terms of passenger charges with an average of almost USD 84 for international travels (see Figure 1)

Figure 1. Average International Passenger taxes and fees per African sub region. Source: AFRAA / IATA ACIC, 2020.

According to the African Airlines Association “the high level of taxes, fees and charges is a critical issue and it is counter-productive for air transport development in Africa”.

It is observed that the top ten countries visited in Africa (see Table 1) are located in Northern Southern and Eastern Africa. So, it is evidence that the reduction of taxes and charges can allow a significant stimulation of demand on West Africa. This will help the airline sector to become more competitive and attractive.

CountryMillion Tourist
Egypt11.7
Morocco10.9
Tunisia6.4
South Africa5.7
Kenya1.48
Tanzania1.4
Mauritius1
Rwanda1
Ghana0.9
Zimbabwe0.89

Table 1. Africa's Most Visited Countries (2022). Source: Africa Facts Zone.

Another important factor to propel adaptation of hotel business model to new technologies is the notion that consumer behavior is dynamic, surveying the present-day consumer behavior towards hotel services in West Africa, from customer experience perspective, quality of service and satisfaction there is a huge gap yet to be filled, for instance in this present year of 2023 guests encounter problems like poor or no access to hotels online and offline, slow and inefficient standard of services etc., research has shown some hurdles faced by some hotels for instance low staffing, lack of infrastructures and technologies required to make customer experience seamless and effortless, these setbacks amalgamating with customer expectations cut short undoubtedly results to negative consumer experience.

A fundamental foundation in hospitality and tourism industry is consumer behavior, this factor raises or diminishes the interest of tourist and customers regarding a particular hotel, destination, products and services. Conventional consumer behavior elements like service experienced, failed service, cost, gratuity, and purchasing manner of customer sums the term standard of service/quality of service. Furthermore, research on adult customers indicates the rising significance associated to the market segment as consumer commitment and devotion is center addressee for consumer behavior.

Conclusion

Competition in the hospitality industry is on the rise, to compete with high-end hotels many low-standard hotels have begun implementing various technologies to improve guest experience, therefore the call for hoteliers to rise to the challenge is an exigency.  

Evidently Egypt took the lead with almost 25,000 rooms in 103 hotels (see Table 2), and is streaking ahead of other countries with more than three times the number of rooms in second-placed Nigeria, and nearly three times third-place Morocco. Nigeria moves into second place this year, with 11 new deals signed in 2022 with BWH Hotel Group (two Best Western Plus-branded hotels), Marriott International (four hotels under their Marriott Hotels & Resorts, Protea and Residence Inn brands), Wyndham (a Wyndham and a Ramada), Continent (two deals) and one by newcomer Leva.

Table 2: Hotel chain development pipeline in Africa. Source: www.africabusiness.com

No sector is left out in the harsh experience of inflation, one out of many resultant effects of inflation is making certain products and services seem out of reach for customers. Maestros Hoteleros encourages hoteliers to have a clear understanding and prior knowledge on the right approach to tackle the issue of inflation and seize the opportunities that comes under these circumstances with the aim to have a proactive attitude instead reactive one, always there are improvements areas to tackle it.

The right track as an independent hotel is stay and defend its identity and selling in both off and shoulder seasons, to attain this the acclimatization of new innovative hotel technologies for a seamless guest experience is a necessity. Understanding the benefits of these technologies and their impacts on guests is a stepping stone to boosting the bottom line of your business.

REFERENCES

African Digital Business Magazine (2022). Egypt and Marriot power hotel development in Africa. Africa Business Magazine. https://africabusiness.com/2023/03/22/egypt-and-marriott-power-hotel-development-in-africa/. (Accessed 31 October 2023).

Anubha Jain (2023). QR code for the Hotel Industry. QLOAPPS. https://qloapps.com/qr-code-for-hotel-industry/#. (Accessed 04 September 2023).

Biz4Intellia (2023). IoT Smart Hotels are Enabling Innovation in the Hospitality Industry. How? Biz4Intellia IoT Solution.  https://www.biz4intellia.com/blog/iot-smart-hotels-enabling-innovation-in-the-hospitality-industry/. (Accessed 04 September 2023).

Ciku Kimeria (2019). Africa’s tourism industry is now the second fastest growing in the world. QUARTZ. https://qz.com/africa/1717902/africas-tourism-industry-is-second-fastest-growing-in-world. (Accessed 14 December 2023).

Davide Petramala (2023). AI, How Voice AI is reshaping the Hospitality industry. SOUNDHOUND AI. https://www.soundhound.com/voice-ai-blog/how-voice-ai-is-reshaping-the-hospitality-industry-5-key-use-cases/. (Accessed 12 September 2023).

Disha Gupta (2023). The importance of digital tech adoption in hospitality. WHATFIX BLOG.  https://whatfix.com/blog/digital-adoption-in-hospitality/.  (Accessed 11 December 2023).

EHL Insights (2023). 2023 top hospitality industry trends. EHL INSIGHTS.  https://hospitalityinsights.ehl.edu/hospitality-industry-trends. (Accessed 7 December 2023).

IMF (2023). The inflation rate, and average consumer prices. International Monetary Fund. https://www.imf.org/external/datamapper/PCPIPCH@WEO/OEMDC/. (Accessed 28 November 2023).

Joseph Ekeng (2023). Nigeria ranks second in Africa for hotel investment in 2023. Marketing Edge. https://marketingedge.com.ng/nigeria-ranks-second-in-africa-for-hotel-investment-in-2023/. (Accessed 20 October 2023).

Kaitlin Herbert (2022). 4 ways businesses can use technology to battle inflation. TechTarget. https://www.techtarget.com/whatis/feature/4-ways-businesses-can-use-technology-to-fight-inflation. (Accessed 3 December 2023)

Oleksii Glib (2023). Contactless Solutions for Hotels: the Revenue Driver for Hospitality Business. Acropolium. https://acropolium.com/blog/contactless-solutions-for-hotels-the-revenue-driver-for-your-hospitality-business/. (Accessed 12 September 2023).

Okocha, Rejoice Ebere, Agina, Emeka Kenechi Ojiula, Uchemefuna Benjamin (2021). Service quality, customer satisfaction and behavioural intentions: application of lodging quality index model on hotels in South East, Nigeria. British Journal of Marketing Studies Vol. 9, Issue 4, pp.18-35, 2021 Print ISSN: 2053-4043, Online ISSN: 2053-4051.

Patrick Wisdom (2023). Tourism: WTTC list of the top 9 most visited countries in Africa in 2022 shows that beaches rank as the most popular attraction. African travel and news source.  https://atqnews.com/tourism-wttc-list-of-the-top-9-most-visited-countries-in-africa-in-2022-shows-that-beaches-rank-as-the-most-popular-attraction/ (Accessed 4 November 2023).

Raffaella IRIE (2023). Taxes, Fees, and Charges in Africa. AFRAA. Taxes-fees-and-charges-study.pdf (afraa.org). (Accessed 23 November 2023).

Revfine (2023). Robots in the Hospitality Industry. Revfine. https://www.revfine.com/robots-hospitality-industry/. (Accessed 04 September 2023).

The worst nightmare as a hotelier is walking down the halls of your hotel and realizing that rooms are empty. There’s a sad stillness that not only marks the sign of a quiet moment but also the sign of a failing business strategy.

Marketing plays a crucial role in helping hotels maximize bookings and as a consequence gross revenue. It is a fundamental manner in which those in the hotel industry can reach out to potential customers, conveying their unique selling proposition and brand values.

Regarding hotel marketing "universe", specifically Content Strategy, which focuses on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience. it's a powerful tool that will enhance the performance of your occupancy ratio in the medium and long term.

Nowadays, building a content marketing strategy for your hotel or another accommodation type, shouldn't be something to brag about. That’s because people don’t buy your bed or room. They buy stories, experiences, and how you make them feel. There are the most popular content marketing formats you can use such as blog posts, social media posts, video content, podcasts, email newsletters, how-to guides, photos, etc. As you can see, you can choose between many formats and as well many social solutions and tools to drive growth, build trust, and inspire loyalty on any digital and social channel taking your social media game to the next level and appearing in the best position to the right audience.

Not all hotels are the same, and there are different “hotel products” based on their star classification, hotel concept (boutique hotels, resorts, apart-hotels…), location, business philosophy, etc. Knowing who you are and what you offer is the main step to creating the correct content for your audience that previously was identified. As much as you “show” yourself naturally and honestly, the more the human connection will be enhanced. Quality content is more efficient than quantitative content, and the results are not immediate, however with perseverance and following a consistent content strategic line, SEO position and customer perception will be improved. To add, accurate keyword research, trend analysis, and search behavior predictions plus outstanding content marketing increases engagement with quality leads with a direct impact on content marketing ROI (Search Engine Journal, 2023).

Highlighting here, that great communication begins with connection and constantly talking is not necessarily communicating. Focusing on your core value and your specialty is much better than encompassing multiple services and, not for much as doing so squeezes you harder, that finally it will frustrate the expectations of your customer and hence your reputation. Defining a content strategy based on your proficiency will attract your correct audience and hence your client.

If you are interested to learn more about different social media solutions and how we can support you in rolling them out, please contact us!

One of the most vital solutions from a hotel commerce platform that your hotel can adopt is the Channel Manager. It is the only way to adequately control and grow your business online in today’s demanding market. Comprised of many seamlessly integrated features, a channel manager will allow you to run your hotel to a higher standard, with minimal effort. With an online world that never sleeps and guests that demand attention 24/7, you can’t afford to be “off ever”. For example with a Channel Manager, you can easily update your room inventory, making the most updated information available to all the Online Travel Agencies (OTAs) you do business with. These tools will help your hotel reduce the risk of overbooking, cancellations, and no-shows and, instead, increase revenue and guest satisfaction.  

Online Travel Agencies (OTA) and direct reservations from your own website are, without a doubt, a lifeline for hotel owners, and here are a few steps to get your strategy working efficiently and to maximize your revenue before you implement a Channel Manager tool:

- Find the Right OTA Mix depending on your business hotel model.
- Use High-Quality content as images and texts.Identify your mix – product and focus on your room typology (standard, superior, suite, etc) with the aim of up-selling and cross-selling.
- Allocate resources on “mapping your rooms” is a key point, not all the OTA’s have the same terminology and integration with your channel manager according to your type of room.
- Identifying the forecasting demand in your city, district, and direct competitors will help you to organize yourself in terms of resource planification and optimization.
- Controlling your inventory and avoiding overbooking will improve your brand name and reputation.
- Analyze potential integrations with your existing technology, opening up and optimizing your distribution across the widest range of booking channels.

The impact of technology in the hotel industry has become solid in the highly competitive hospitality industry.  In a nutshell, if you want to increase your hotel revenue, you must keep up with all of the industry’s latest technologies.  

Contact us to know more about Maestros Hoteleros and how we can help you to develop robust strategies using the comprehensive technological tool to increase your sales and revenue. 

We have observed how the year 2022 began with a positive recovery with a considerable increase in the number of overnight stays in March 2022 versus March 2021, although not at the same pre-pandemic level it was a positive development despite the omicron variant (see graph 1).

In the midst of the post-COVID-19 recovery period of the main international airports (TIER1 and TIER2) with regards to their connectivity, traffic and air capacity and  also taking into consideration predictions from the International Civil Aviation Organization (ICAO) up to end of 2022; an optimistic scenario where international air traffic will recover 73% and domestic traffic 95% and a pessimistic scenario where recovery will be 58% and 56% respectively. Impacting the above, the outbreak of the Ukraine-Russia war may jeopardize the recovery of international tourism demand due to the application of lasting sanctions such as the closure of airspace that will affect the mobility and connectivity of tourists from the main source markets, bound for Spain.

We must not lose sight of the fact that in 2019, 1.3 million Russian tourists arrived in Spain (1.57% of the total international tourists that Spain received) contributing 1,992 million euros to the tourism sector (www.statista. com, 2022). Destinations dependent on the Russian market to a greater or lesser extent, such as Catalonia, the Balearic Islands and the Valencian Community, faced with a potential scenario in which the arrival of Russian tourists will fall, will weigh down the operating accounts of multiple hotel establishments, resorts, tourist apartments, residences, etc. In such circumstances of uncertainty and with no sign of improvement in the short term, at Maestros Hoteleros we recommend that management/managers and owners with high exposure to the Russian market do not stop devoting efforts to learning about the environment and strengthening their business in in order to attract customers from other markets. To this end, we recommend the following lines of action:

Surrounding analysis

• Predictive analysis of the destination to identify present and future demand based on its geographical location, which allows the design of highly optimized marketing campaigns on metasearch engines.

• Analysis of air capacity to the reference destination.

• Analysis of the audience and their behavior, having access to key information regarding followers as well as their segmentation by age and gender.

• Measure and control the evolution of followers over time in each social network and by channel.

• Measure and evaluate the online reputation of the reference destination.

• Measure the impact and interactions of each publication as well as their analysis and geolocation.

• Benchmarking of follow-up of other destinations to detect campaigns and growth of fans and search trend of the reference destination.

Internal analysis

• Review and update your technological infrastructure: the following figure (see figure 2) represents the important tools that allow you to understand the markets you are targeting, analyze your competitors and position yourself accordingly in the market.

Important considerations when reviewing or updating these tools are: market trend analysis, e-commerce strategies, increased speed in terms of connectivity and real-time inventory updating, customer segmentation, loyalty programs, experience management of the client, accessibility and generation of an organized and nourished database.

• Analyze your historical data by performing a deep dive into the main KPI's of your business, such as evolution of the average sale price (ARR), revenue per available room (RevPar) and occupancy rate (ORR) among others.

• Detect hidden revenue opportunities by identifying areas for improvement by working to reduce the potential gap between your supply and market demand.

• Combine all these tools to a higher level, which will allow you greater control of online distribution, a high level of reconversion in direct and indirect reservations and, most importantly, greater knowledge of the customer.

Figure 2. Technological infrastructure. Source: Maestros Hoteleros

• Connect all the departments of your hotel/resort through technological systems, achieving greater operational efficiency and increasing customer satisfaction.

• Ongoing training for all the organization's staff, increasing their level of professionalism because, ultimately, a happy and satisfied customer is the greatest asset.

In short, we hope that despite the uncertainties and risks on the horizon, we will collaborate together so that Spain is once again the favorite destination in the short to medium term with more than 80 millions tourist arrivals per year.

It is remarkable how much research material is in place in defense of blockchain technology as the beginning of a new era, based on the quote by the authors Olea and Glenn Tjon (2019) "Blockchain is possibly the most important disruptive technology of the last decade that is little by little changing the world of business, allowing transactions to be recorded permanently within a decentralized network, which uses a distributed registry, which means that all its participants are owners of the information. This is known as blockchain, that is, information chronologically linked by means of a hash or cryptographic code." This could indeed become the trend in the next five years with a multitude of developments and applications in the field and even more so when institutions such as the World Economic Forum (WEF, 2015) foresee in their calculations and according to such data, that by the year 2027 10% of global GDP will be stored in this type of technology, which is mainly due to the applications that it has plus the use of virtual currencies.

Undoubtedly, the potential of using blockchain technology in the hotel sector is immense as it will improve the overall customer experience, increase hotel efficiency and there will be greater interest in investing in the hotel industry due to increases in terms of EBITDA. However it is necessary to maintain some objectivity and investigate the current and available blockchain technology closely following the advances that occur in order to explore possible applications to the hotel industry. These advances and their implementation will have a positive impact on companies that bet on this technology, achieving important competitive advantages. Some of the areas in which knowledge will be advanced and that will help hotel management teams to make better decisions in an environment of greater confidence and increasing efficiency will be; geolocation and customer tracking, geolocation and food tracking, loyalty programs, digital identification and smart contracts among others.

In the very near future, blockchain technology will create new markets, opening up multiple opportunities applicable to the hotel sector, improving the customer experience, automating processes, reducing intermediation costs, creating greater value for shareholders and different agents as well as broad access to new forms of financing via tokenization. At Maestros Hoteleros, we firmly believe that the new economy based on blockchain technology is and will be a disruptive technology and we will see new applications at great speed that will ultimately democratize, even more so, the tourism sector and, without a doubt, the tourism sector hotelier.

(more…)