Expanding capacity: Road and hotel projects are driving sector development

With a number of international players set to enter the market in the near future, Ghana is currently experiencing a modest hotel boom. This increase in hotel infrastructure is complemented by large-scale transportation developments. New infrastructure projects are creating opportunities for tourist endeavours, as well as providing more rapid connections between the nation’s most important business destinations.

COMING SOON: Greater Accra, with a population of 3m, is currently home to 42% of hotel capacity. The city already hosts a number of international hotel chains, including local branches of the Holiday Inn, Novotel and Mövenpick, with more in the works. Perhaps most visible is the upcoming opening of the Kempinski Hotel Gold Coast in downtown Accra that is slated for completion in early 2014 offering 269 rooms. The hotel will also include commercial space for restaurants and retail outlets. The 200-room African Sun Amber Accra Airport Hotel will feature two conference rooms and a restaurant, and is due to open in 2013. A 168-room Radisson Blu Hotel is also set to make a debut, with an opening scheduled for late 2014, and a 209-room Marriott International is looking to finish construction and begin operations in late 2013. Indeed, hotels are going up fast. “It takes an average of two to three years for a new hotel to be built and functional in Ghana, which is actually comparatively fast,” Bruce Potter, general manager and the Holiday Inn Accra Airport, told OBG.

ROOM FOR MORE: There are a number of factors suggesting that the market will be able to absorb this new capacity. Occupancy rates in three- and four-star properties remain high because of a perceived lack of supply. Hotels of the four-star range continue to average 80% occupancy, according to the Ghana Tourism Authority (GTA). For example, the 109-room Novotel Hotel in Accra averaged a 73.5% occupancy rate in 2012, despite increasing room rates 15% on the previous year. Still, the World Economic Forum’s (WEF) 2013 Travel and Tourism Competitiveness Index ranked Ghana sixth in the world in terms of hotel price. “Hotel prices, on the surface, may seem expensive, but given the current supply-demand situation, as well as high operating costs, the price is justifiable,” Patrick Fares, CEO of Royal PF Holdings, which manages a range of tourist accommodation in Ghana, told OBG. According to the Ghana Statistics Authority, the hotel and restaurant industry was the highest performer within that sector, growing by 13.6% in 2012 – a figure that was well above the government’s set target of 10% expansion.

SECOND CITIES: Takoradi, the capital city of the Western Region, and its twin city Sekondi, have emerged as important business capitals following offshore discoveries of oil in the past decade. Currently, Accra has the country’s only international airport, but Takoradi and Tamale have both been proposed as sites for new international airports in the medium term as part of the country’s National Tourism Development Plan 2013-27.

Not surprisingly given these developments, Takoradi has become the second-biggest market for new hotel projects. The Protea Hotel Group of South Africa, the continent’s largest hotel chain, is to open a 136-room facility in Takoradi in 2013. In May 2013, plans for a new Princess Town Hotel in Takoradi were announced.

When completed, the 150-room hotel will be the first five-star hotel outside of Accra. Plans call for the construction of a conference centre and Takoradi’s first 18-hole golf course. The new facility is expected to benefit from Takoradi’s status as an important business centre, which was true even before the country’s recent hydrocarbons boom. International hotel chain Best Western is planning to open a nine-story Best Western Plus branch in Takoradi in 2013 as well.

GETTING THERE: Transportation upgrades should help expand the country’s tourism development. The 15-year tourism development plan calls for establishing “a stronger south-north movement corridor along Volta Lake and the highway to the east of the lake, [which] will help strengthen the tourism connections to Tamale, Mole and the north, and form the eastern part of an enhanced triangle of tourism resources connecting Accra, Tamale and Kumasi.” The government is ahead of the curve and has already pledged to develop national infrastructure under the National Transport Policy of 2007 to improve existing transportation networks. Enhancements to rural transportation infrastructure will benefit domestic and home-stay tourism. Development of regional tourism is further supported by the soft infrastructure of government policy, like the decision to develop specific district offices for tourism promotion.

IN THE AIR: The number of airline carriers servicing Ghana has grown rapidly, from 24 carriers in June 2011 to 40 by the end of 2012, representing a growth rate of 67% in carriers serving Ghana’s five airports in the span of 18 months. The number of travellers passing through the country’s air hubs is climbing as well, with the number of those transiting at Kotoka International Airport (KIA) climbing by 9% in 2012, from 1.59m in 2011 to 1.73m in 2012, according to the Ghana Airport Company Limited (GACL). The number of passengers flying in and through Ghana is expected to climb to 10m by 2024, and in 2013 alone aviation activity is expected to increase by 10% (see Transport chapter).

To meet the needs of the growing number of international tourist arrivals, the country has embarked on a plan to improve its airports. In 2012 design and feasibility studies were completed for expansion of the KIA, Ghana’s largest facility. Plans call for renovation of the main terminal and construction of several aerobridges, and in 2013 the government approved the GACL’s $402m budget for the airport’s reconstruction, to be financed via a private-public partnership (PPP). Once completed, the airport will achieve Federal Aviation Administration (FAA) Category One status as a fullservice airport. Similar funds raised via PPPs and administered by the GACL are being allocated to facilities outside the capital. The government approved a credit facility of $100m to upgrade the Tamale airport in northern Ghana that will expand its capacity to handle international flights. Plans also call for a new control tower, a runway for international flights and a Hajj terminal. A further $65m is being sought from private investors via a PPP arrangement with the GACL. In 2013 work began on improving the runways of Kumasi Airport as part of a $300m redevelopment project for the airport in the nation’s second-largest city, of which some $1.73m is expected to be raised via PPP. Other major refurbishments of the facility – which has not seen upgrades in nearly three decades – include a new catering establishments, a modern parking facility and a new conference hall. Once the works are complete the airport will be able to handle 5m visitors per year, with 2016 the target date for completion.

TAX BREAKS: The sector could see even further growth if tax policies are changed. Currently, 64% of the price of international air tickets to Ghana comprises taxes, fees and surcharges, whereas in neighbouring Nigeria the tax component of an air ticket is roughly 35%. The government continues to reform the sector in an effort to boost competition. In early June 2013 authorities reduced the price of aviation fuel by 20% and called on both domestic and international airlines to lower ticket prices to reflect the new standard. However, airplane tickets to and within Ghana remain higher than elsewhere in Africa, which has helped make business aviation competitive in Ghana. The country is now the third-largest destination for business aviation in Africa after South Africa and Nigeria. Ghana accounts for 8% of the business aviation sector on the continent, while Nigeria contributes 9%. The oil and gas boom has also led to a sharp uptick in the helicopter flight segment.

The country is now home to three helicopter companies further meeting the needs of corporate travellers.

RAILWAYS: Currently, the country is in the process of redeveloping its passenger railway service connecting Accra, Takoradi and Kumasi. A $2.6bn Ghana Railway Project is under way. The project will take three years to complete, and the new line is set to increase rail speeds from 56 to 120 km per hour. Part of the funding for this upgrade comes from a $3bn loan from the China Development Bank. The government is also financing the construction of four ferries to expand services on Lake Volta, a popular tourist destination and one of the world’s largest lakes. This new emphasis on railways, and in particular river transportation, is expected to open up new regions of Ghana to ecotourism.

The increase in hotel and transportation infrastructure will allow for a better packaging of the country’s attractions. Many of Ghana’s destinations are clustered closely, such as the castles of Cape Coast and Kakum National Park. Thus, one goal of the sector is to bundle tourist sites and develop circuit tourism. The current infrastructure boom should boost this process.

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The Report: Ghana 2013

Tourism chapter from The Report: Ghana 2013

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