Why Marriott International Inc. Is Investing In Africa

It might be surprising that after aggressive expansion in China and Latin America over the last few years, the next big push for international development by U.S. hotel brands is Africa. Marriott International (MAR -0.13%) has so far been the company making the biggest investment in Africa, and continues to plan rapid expansion there well ahead of competitors like Hilton Worldwide (HLT -2.19%) and Starwood Hotels and Resorts (NYSE: HOT). Another reason Marriott is the best player in Africa now: investing in the next generation of leaders that will help grow the company.

Becoming the largest hotel brand in Africa
Marriot's big start in Africa came this last April with the acquisition Protea, a hotel chain in Africa that would make Marriott the largest hotelier in Africa with the added 117 properties in seven African countries. Since then, Marriott has set its sights on Africa higher with plans for an additional development of 40 properties, totaling properties in 17 African nations, by 2020. Most recently the company said that it would have 9 of those hotels, around 1,300 rooms, completed in 2015.  

A Protea hotel room in Nigeria. Photo: Marriott

Alex Kyriakidis, Marriott's president of Middle East and Africa, said that "The potential of the African market is awe inspiring and only really matched by the extraordinary people and places we encounter every day as our brand puts down roots across the continent ... With it, we will create jobs and support local communities because our success is only ever possible through strong bonds of friendship, trust and cooperation in the markets we inhabit." That is why Marriott is making this important contribution to leadership education in Africa now.

Why is Marriott building leadership schools in Africa?
Now, Marriott is growing its African expansion beyond hotels and into the local schools. In 2012, Marriott partnered with a Women's vocational school in Rwanda to help teach the students there the fundamentals of business, leadership, and hotel and tourism management. The reason Marriott did this? These are the future leaders of their biggest growth market.

A group of Marriott leadership program graduates. Courtesy Marriott

The system works in that as one group of women completes the program and is prepared for supervisory roles, they then will also assist to teach the next, and larger, group of students. This ripple effect will help to boost education, hotel and tourism management skills, and Marriott's already large presence in the region. This will be especially important in the next few years as Marriott increases their number of African workers by nearly 50%.

Marriott currently employs around 21,000 workers across Africa, but over the next few years that number should jump by about 10,000 employees. Marriott management has achieved a lot in a short amount of time in Africa, but with development and investments like these, this is just the start. Africa's hotel industry looks like it could be very profitable in the years to come. That's why other brands are looking to get their piece of the pie as well.

Marriott isn't the only investor in Africa, but it is the biggest
Marriott is not the only one who sees development in Africa as a source for future growth. In fact, even President Obama attended a forum on U.S.-African business development in August, which included more than 200 CEOs of U.S. and African companies that discussed how to further African development. At the conference, Marriott CEO Arne Sorenson gave a presentation on his company's plan for African business development. But Hilton and Starwood also see this exciting industry and are building their own portfolios there as well. 

In 2013, Hilton had a reported pipeline of 6,230 rooms at 23 hotels in Africa over the next few years. Yet, Hilton's 68 properties in the Middle East and Africa combined, with a smaller African development pipeline than Marriott, does not match the investment Marriott has in Africa. Likewise, Starwood is also reporting expansion in Africa and at the opening of Starwood's 10th property in Nigeria, Starwood VP Bart Carnahan said that "Nigeria remains to be an important growth market for Starwood and we see a significant opportunity in growing our mid-market brands in the country and throughout all of Africa." Yet again, Starwoood's number of properties can not compare to that of Marriott and the gap will only widen in the next few years.

What can this African development mean?
The investment of major hotel brands in Africa could lead to massive results in the next few years. While each company is building their presence there, neither Hilton or Starwood can boast the kind of investment that Marriott has made. But this investment is not only in building many more properties in Africa. Through the partnerships like the women's business and leadership school in Rwanda, Marriott is investing in the African people and building a company to remain the leading brand in Africa for years to come.

Already running over 4,000 properties worldwide, and with many more under construction, Marriott is becoming an even more interesting company to watch. With a very solid earnings release last quarter of earnings up 25% year over year and more growth projected for the quarters to come, Marriott also looks like the type of investment that could keep you sleeping comfortably. And this smart investment in Africa is the kind of catalyst that could keep that growth coming for the long term.