Arabian & African Hospitality
Investment Conference

20-22 September 2021 | Madinat Jumeirah, Dubai, U.A.E

Podcast

AHIC Talks Episode 10 - Andrew McLachlan


In this week's episode of AHIC Talks, Mathew Weihs spoke to Andrew McLachlan, who joined Hilton last year as the brand's Managing Director of Development for the Sub-Saharan African region. Andrew shared a preview of the development strategy for the African continent with some of the brand's key brands such as Hilton Garden Inn, LXR, Waldorf Astoria and many more. He also talked about how the brand's history and legacy along with a focus on safety have helped its properties stay resilient during the pandemic.

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TRANSCRIPT:

[Intro]

Welcome to AHIC talks, a podcast for the Arabian & African Hospitality Investment Conference: The annual gathering of the hospitality and investment community for the Middle East & African region. Tune in each week to hear our team at AHIC share insightful conversations with industry leaders and innovators in the hospitality and investment community. And now, let's dive into this week's episode.

Matthew Weihs: So welcome to another AHIC podcast. We're going to be focusing on the African continent today, and what the big brands are doing in Africa. And to help us do that I've got Andrew McLachlan, the Managing Director of Development at Hilton here. Hi Andrew, welcome.

Andrew McLachlan: Hi, good day. Nice to chat with you Matt.

Matthew Weihs: Well, it's good to have you here. Just as a brief introduction, tell us firstly, about the role that you've got and obviously Hilton's development strategy in Africa.

Andrew McLachlan: Sure. So I'm the managing director for developments for Sub-Saharan Africa. I joined Hilton during the course of 2020. And my role really is to accelerate Hilton's world-class brands across the African continent. So we've got a laser-sharp development strategy that's been introduced, where we've got key brands that we want to introduce to certain markets across the African continent. So the team and the company is exceptionally committed to continued growth on this continent.

Matthew Weihs: Let's come back to that laser focus a little bit later. But for now, give us a little bit of an overview of where you've got up to date, a bit of the history of Hilton as a brand in Africa.

Andrew McLachlan: Sure. So Hilton was sort of the first mover in Africa. So we've got a long history and heritage. So we've been on the continent for over 60 years. We've got hotels, which are sort of well known, which are renewing, so they entered their second or third term of agreements. So these hotels have been trading for over 50 years, like the Hilton in Nairobi, Hilton in Addis Ababa, Hilton in Abajo or Yaoundé. So today, our portfolio is just over a hundred hotels, sort of 50/50, sort of virtually from an open or under development. We have a number of excellent brands. We have 11 of our 18 brands that we're developing on the African continent. We've had new introductions of brands over the last 12 - 18 months, so we've been able to introduce Waldorf Astoria to sub-saharan Africa. So we have a Waldorf Astoria and a developments in the Seychelles, which is actually on its own island on Platte Island. We've introduced LXR, we actually open an LXR in a couple of days, which is a collection luxury brand also in the Seychelles. We opened our next generation Hilton Garden Inn in Durban, in an area called Umhlanga, which we opened late last year, which is really sort of a flagship of what the new generation of Hilton Garden Inn is. And that's a brand, one of our high brands that we really want to grow across the continent.

Matthew Weihs: Tell us a bit about that, next-generation, what does that actually mean?

Andrew McLachlan: It's a newer design. So the design is a lot more contemporary, sort of modern; it gives elements of a little bit more than you would expect for a product that's positioned in the upper midscale segments of the market. So it's modern from an interior design point of view, from a good spatial management point of view. We think it's a brand that's really got a lot of legs to grow across the African continent. Because it leads with the name, Hilton Garden Inn. In a lot of markets, people are going to see Hilton first, which is obviously the most recognized name in in hotels today. And so it's a product that we can now showcase. We've got this perfect next-generation Hilton Garden Inn sitting in Durban, which we can bring the owners, investors, stakeholders to actually touch, feel and experience what a Hilton Garden Inn is all about. Because it's a very successful brand elsewhere in the world. And we've got a lot of confidence that it's a brand that we're going to be able to take to a lot of markets in Africa, where an owner and investor can't necessarily afford to have a fully-fledged Hilton, but he's able to have something which is the right commercial fit for that location.

Matthew Weihs: And so I cut you off there, you were talking about the others that are now in the market. Do you want to expand on that?

Andrew McLachlan: We're starting to see some great traction with Canopy by Hilton, which is our lifestyle product. So it's an upper upscale lifestyle brand. So we have three Canopy by Hilton under development in three different segments of the market. So we've got an exciting Canopy by Hilton under construction in Cape Town, which will be the first to open. We have a Canopy by Hilton resort in the Seychelles which is great to take that brand into a lifestyle resorts offering. And then we also have a Canopy by Hilton in Morocco which is under development. So in addition to us really focusing on our core hard brands, which are very, very well known, really being Hilton Hotels and Resorts, DoubleTree by Hilton and Hilton Garden Inn, we're also bringing the newer Hilton brands to the African continent, the lifestyle products, be it an LXR or a Canopy by Hilton into the market

Matthew Weihs: Is that reflective of where Africa is as a continent or as a brand in the continent.

Andrew McLachlan: It's a little bit of both. So what I've experienced over the last 12 months, especially as we continue to grow, and when we still see opportunities, in certain markets, people are still favour tried and tested. And they're saying, well, I know what a Hilton Hotel is or I know what a DoubleTree is, and I want to go with a tried and tested brand that's been around for a long, long time, and it's got resilience or dependence. So no matter what happens over a period of time, these brands have been able to trade successfully through that. But then we have other pockets of Africa which is a little bit more developed. And the more that they develop the markets, the more your real profile of guests changes, competition is a little bit different. And then there's definitely a space for your lifestyle products and your collection brands where you're doing something a little bit unique, you're able to provide a brand which has got a lot more experiential travel linked to it. And we're fortunate enough that we actually have great brands, and we're able to bring the right brands to different markets of Africa at the right time. So we take that as an example. Hampton by Hilton, which is our biggest brand within the company, if you add number of hotels, there's over 2500 hotels under Hampton by Hilton. We are only going to bring that brand to South Africa. We think South Africa has the depth in the market, it has the scalability for us to bring a global economy brand to the South African markets. Because there isn't really any international brands playing in that segment of the market today. And it's a proven brand, it has been successful wherever it has been launched. But it's not a brand that we will roll out into other parts of Africa. We don't think it is necessarily the right infrastructure to support that product in other markets. But within South Africa, that would be where there's a very, what I refer to as a laser focus. So that brand will only be focused on the South African markets.

Matthew Weihs: Coming back to the sort of changing face of Africa. We can't avoid the last year's topic of conversation, I'm afraid. We'll look at COVID and how that's impacted the pipeline and the change. Do you sort of see that you've had to adapt as a brand because of what's happened? Or do you think that it's going to change the type of products that you can supply for the future?

Andrew McLachlan: The last year and a half have affected the pipeline, the existing pipeline. So we've seen some delays in some of our hotel openings. And that's got to do with sort of supply chains and the speed of work on construction sites because of COVID restrictions that you're not allowed to have the same number of workforce on the site. And we've obviously adapted our operational hotels to comply to local COVID regulations. And each country is different on how its managing COVID. I think Hilton was really great as we're able to sort of be the global pioneer at reacting first and putting very strict COVID protocols in place that we could roll out across all our brands across the world. So I think some of those design elements are sort of temporary, that have really been put in place purely to focus on how we deal with making sure that our customers have a safe stay while they stay with us at the moment. What we have seen though, is that I think the big brands and the well known brands, that there's been an attraction to go back to them, and go to brands which do have a clear protocol in place. And an owner, and a lender, and an investor is working with the tried and tested as opposed to the independent, or somebody that's new. So we haven't seen a different sort of demand for product as such, because of COVID. We have seen that there's opportunities, we've seen that there's a greater ability to us to look at conversion hotel. So you've had independent hotels that are now needing to relaunch themselves into the marketplace, because what COVID did do is it put the whole industry into a reset mode. So even if you were a trading hotel for the last 10-15 years, everybody had to close for a certain period of time and then reopen. And then with that reopening, the guys might not be as geared up as it were to relaunch themselves into the marketplace. So the entire industry is reopening. So you need to have a reopening strategy in place and your traveler has changed and his habits have changed. So you've got to go back and either find a different customer for your hotel market or convince him that you are the safest hotel and the best hotel product for him to use. We've seen opportunities where we can now use some of our brands specifically to help owners convert and be part of the Hilton system. So Curio Collection by Hilton and DoubleTree by Hilton are the two brands we focused on the most from a conversion point of view. So it's either taking independent hotels and owners and assisting them to relaunch themselves into the marketplace and make sure that they get their fair share of the new market share; or its owners that haven't been comfortable with their current operator, and they're now looking to re-flag and reposition. Or they need to tell a different story to lenders and investors, that's how they're going to reposition themselves. So there are opportunities in that segment of the market as well.

Matthew Weihs: You talk of safety being a prime, you mentioned that word a few times. But how has sustainability come into all of this over the last year? Has it increased in the mindshare of the owner community and especially obviously on the continent of Africa, which has such a big opportunity with sustainable buildings? Has this started to come into people's thinking more and more? And how have you reacted to that?

Andrew McLachlan: So I think our design and construction standards, we're always wanting our hotels to be designed as sustainable as possible. And I think what has happened and Africa does follow trends of what's happening in the rest of the world. Your professional teams are a lot more familiar with sustainability and sustainable building. There's access to different types of funding that you can use if you meet a certain sustainability quota. So it's not part and parcel of -- so when we get brand new hotel projects, and we're looking at or we're going through the key elements that we want to focus on, sustainability is something which is now part of the agenda like you would go through the other eighteen key disciplines that you're wanting to look at, because long term, it's definitely the right thing to do for any new build hotel in Africa.

Matthew Weihs: Now give us the headline numbers. How many rooms have you got in Africa? I know you mentioned 100 hotels and how many are in the pipeline?

Andrew McLachlan: So we have 43 trading hotels and 59 hotels in the pipeline. And I think what's good to sort of highlight is that Hilton Hotels and Resorts has the largest pipeline of hotels and hotel rooms on the African continent. We also have the largest pipeline of hotels where there's actually construction happening. So there's a difference between sometimes having a pipeline and having a pipeline that's actually active. And that's independently being sort of tracked by W Hospitality, so in their 2021 report...

Matthew Weihs: I'll put a plugin. We did a podcast with Trevor a little while ago, so you can go back and listen to that. So you mentioned at the beginning there, key locations, key products for those locations. Do you want to give us an overview of where you're looking, what you're trying to build?

Andrew McLachlan: So we're really going to focus on three hard brands being Hilton Hotels and Resorts, DoubleTree by Hilton and Hilton Garden Inn, and really look at the scale of those three brands in key locations. So if we're looking from a West African point of view, it's cities such as Dakar, Abidjan, Accra, Lagos and Abuja will be the markets where we want to have scalability with those three brands. And then some of those markets have the ability to take on more, so they might have a Curio Collection, they might have a Canopy by Hilton as well. Then from a Central African point of view, it's really sort of focusing on going into the depths of the markets in Douala and Kinshasa. And from an East African point of view, it's really having a scale in Addis Ababa, and Nairobi and Da res Salaam. So those three cities have the economic fundamentals and enough market depth that we can have scalability in those markets. And then from a southern part of Africa is really looking at Luanda, Johannesburg, Cape Town, Durban, and Maputo as markets that have scalability.

Matthew Weihs: Fantastic! Well, there's only one more question I've got for you Andrew. And that is, is it going to be the Lions or South Africa in the test coming up?

Andrew McLachlan: My heart obviously, is green and gold. So that's a simple answer. But we haven't really played too much rugby since winning the World Cup. So it's going to be a tough one. I think we're quite rusty and we don't have the local crowd, because we're playing in an empty stadium. So we don't have that atmosphere to sort of help us along. And the Lions have come with a formidable side. It's going to be interesting to see.

Matthew Weihs: I hope firstly, that they happen. And secondly, I can't wait for the days that the crowds can be there and fill our hotels up again. But Andrew, I want to say thank you for your time today.

Andrew McLachlan: Just one more thing that I'd like to add its, obviously, from Hilton's point of view, we are so excited there actually is going to be an Arabian and African Hotel Investment Conference in person, where we're able to meet our stakeholders in person. Because our owner class in Africa, they're financially but emotionally invested to their hotels in Africa, and it's difficult for them and for us to grow their hotels and their products remotely. So I think being able to engage with people in person is going to be something that we're all really, really looking forward to.

Matthew Weihs: Yeah, and not the only one. I think it's a very, very nice thing for you to say because I think, this is an opportunity obviously for as many people who can to meet, discuss, talk about the future and do the deals that we know that these events fuel, and there's no other better time, I think to sort of get together and figure out the future. And the future has been wildly sort of changed in different directions. So thank you for that Andrew.

Andrew McLachlan: Good.

Matthew Weihs: Andrew, I wanted to say thank you for your time today and good luck with development in Africa.

Andrew McLachlan: Cheers.

Matthew Weihs: Bye!

[Outro]

Thank you for listening to AHIC Talks, a podcast for the Arabian & African Hospitality Investment Conference. For a full transcript of this conversation, along with other reports and insights visit AHIC.com. We look forward to welcoming you and your colleagues live and in-person at AHIC in Dubai from the 20-22 of September 2021. Register and purchase your pass today at AHIC.com and save on the early bird rate. For any questions email us at Hello@AHIC.com. Until next week, stay safe and keep well.

Published 10 July 2021

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