Johannesburg - Marriott International, the New York Stock Exchange-listed international hospitality group, is planning to acquire the brands and management business of Protea Hotels in South Africa and sub-Saharan Africa.
The US group confirmed yesterday that it had signed a letter of intent with Cape Town-based Protea Hospitality Holdings to acquire Protea Hotels’ brands and its management business.
Protea Hotels operates or franchises 116 hotels across three brands with 10 184 rooms in South Africa and six other sub-Saharan African countries.
The proposed terms of the transaction have not been disclosed at this stage but the parties plan to sign definitive agreements by the end of this calendar year. The transaction could be concluded in the first quarter of next year.
The non-binding letter of intent includes provisions that the parties will negotiate exclusively with each other.
If concluded, the transaction is expected to make Marriott International the largest hotel company in Africa by almost doubling its distribution, to more than 23 000 rooms, and provide a boost to tourist and business travel to the continent, particularly South Africa.
Arne Sorenson, the president and chief executive of Marriott International, said yesterday that Protea Hotels enjoyed unparalleled brand recognition in Africa and its combined portfolio of Protea Hotels and Marriott International brands would create a platform for accelerated expansion and job growth in South Africa and across the continent.
Sorenson said Africa had significant untapped potential for travel and tourism, both as a destination and source of new global travellers.
“The continent’s gross domestic product is anticipated to grow at more than 5 percent annually over the next several years, which we expect will raise more people into the emerging middle class.
“With the Protea Hotels acquisition, our expanded footprint should allow us to become the first choice of Africa’s rapidly growing population of young, sophisticated travellers.”
Alex Kyriakidis, the president of Marriott International for the Middle East and Africa, said the development cycle for opening new hotels in Africa was typically long because of the challenges posed by emerging infrastructure.
Joining forces with Protea Hotels and its respected management team was the strongest way to jump-start Marriott’s footprint in Africa, he said.
“The Marriott Middle East and Africa management team can deliver value and greater growth for Protea’s hotel owners by leveraging these terrific brands with Marriott’s global sales, marketing and development infrastructure. We believe this would also result in more job creation in South Africa and across the continent,” he said.
Arthur Gillis, the chief executive of the Protea Hospitality Group, said Protea Hotels had grown organically to become the largest and leading hotel group in sub-Saharan Africa. And aligning with a global giant such as Marriott ensured it could realise its full potential for all of its stakeholders.
He said Protea had in Marriott found a perfect fit across culture, values and commitment to industry leadership, which would ensure the group remained at the forefront of African hospitality.
Protea Hotels was founded in 1984 and manages, franchises and leases 104 hotels across the brand, comprising a full and diverse range of hotels and resorts; two lifestyle boutique Protea Hotel Fire and Ice brand hotels; and 10 superior deluxe hotels in the African Pride Hotels collection.
Apart from 80 hotels in South Africa, Protea Hotels has a significant presence in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia.
As part of the transaction, Protea Hospitality Holdings would create a property ownership company to retain ownership of the hotels it currently owned and enter into long-term management and lease agreements with Marriott for these hotels while also retaining a number of minority interests in other Protea managed hotels. - Business Report