Opportunity for Investment in Ghana’s Hospitality Industry
Are you looking to invest in Ghana’s hospitality industry? One of the most frequently visited tourist destinations in English-speaking West Africa is Ghana, for many obvious reasons. The country is not in any way lacking in tourist attractions, especially for those interested in nature and West African slave trade era history. The Kakum National Park, Labadi Beach, Elmina Castle, the mighty Volta Lake, and the Akosombo Dam are just a few of the sites attracting foreign traffic to the country.
No wonder the country featured prominently on PWC’s Hospitality Outlook 2017-2027 report as a major emerging market in Africa. Big investors are seeing the light and responding to the stimulus. That is why hotels, both locally and internationally-branded, are springing up in the country. As of May 2017, there were 2,723 hotels and lodges in Ghana.
The country’s government is not relaxing on the natural self-advertising qualities of its tourist sites. Ghana, led by President Nana Akufo Addo, has taken determined steps to overhaul the country’s hospitality industry. The nation committed itself in a planned approach to the development of the tourism sector through the implementation of the Integrated Tourism Development Programme, which culminated into the preparation of a 15-Year National Tourism Development Plan (1996-2010), writes Akua Sena Dansua, one of the country’s former ministers of tourism in the foreword of the National Tourism Development Plan (2013-2027) document.
The 15-Year National Tourism Development Plan (2013-2027) looked at ways in which tourism can contribute to national and local economic development and enhance its role as a leading sector for employment creation, revenue generation, environmental conservation, and national cohesion and overall economic growth. If properly adhered to, the growth contributed to the country’s economy by the hospitality sector will be consolidated consistently for a long time. As one of the current practical steps in walking the talk, the government is also making improvements in transport infrastructure, with the construction of a third terminal at Accra’s Kotoka International Airport and allocation of funds for the repair of roads to popular tourist destinations.
Yet, as the industry continues to grow, novel avenues continue to emerge for investment along the value chain.
Here are five opportunity for investment in Ghana’s hospitality industry.
Tour Operation and Destination Marketing
The hospitality sector thrives on the natural human urge for adventure. Of course, not many things are capable of stopping really adventurous people from seeing other parts of their world. But, what about potential adventurers whose apprehension could be easily shaken off with a little encouragement? That is where the opportunity lies. Several reports on Ghana’s hospitality industry point out that a large percentage of patronage is from abroad. This means there is minimal local tourism. There lies the opportunity for tour operators in the private sector.
Investors could create packages of travel destinations particularly targeted at indigenous adventurers. Such tour packages could be specifically targeted at school and public holiday seasons for optimal benefits. According to the International Organisation for Migration, Ghana has, among others, more than 40 castles and forts, 22 nature and wildlife resorts, 12 beach resorts, 8 waterfalls, and 15 sanctuaries housing monkeys, butterflies, pythons and crocodiles.
There are also 18 historic sites, 6 cultural sites, and 10 craft villages. If an adult of about 20 years old decides to visit just two tourist sites a year, he would only succeed in visiting all the tourist sites by the age of 70. This consideration is a clarion call for investors. It only takes good knowledge of the terrain, good planning, some marketing strategies, and a good transportation system to achieve this.
To link the destinations and the hotels, guesthouses or other forms of lodging in the country, some form of transportation is needed.
Even though the country’s Ministry of Transport oversees the infrastructure for the different modes of transportation — air, inland water, maritime, rail and road — in the country, movement within the country is still mainly by road. According to the World Bank, Ghana spends an average of 1.5 per cent of GDP on road infrastructure, one of the highest in West Africa. Road networks in Accra and other major cities are getting better, as new ones are constructed and old ones rehabilitated. In the National Tourism Development Plan (2013-2017) document, it was pointed out that there are strategic plans in place, under the remit of the Ministry of Roads and Highways, for a series of new road corridors that will allow improved access along the major East-West and North-South routes. For funding, construction and programming purposes, the corridors are divided into sections.
“The majority of the sections are funded, divided between several different agencies, including the Ghana Government, Chinese Government, Brazilian Government, European Union, World Bank, African Development Bank (AfDB), and the Arab Bank for Economic Development in Africa (ABDEA). Delivery of different parts of the network is taking place in a piecemeal manner, but all corridors are currently planned to be completed within a 10-year timeframe,” the document shows.
The road transportation services itself are provided largely by private sector operators and other state-owned companies.
There are tro-tros (mini buses), taxis, and larger buses for inter-region commuting, but the ratio of commuters to available vehicles still leaves a large opportunity for investment in the sector. A check around the country also reveals that there are fewer car rental services than in many other countries with similar potentials. All these are avenues that may still be explored by investors.
“General transportation in Ghana is currently in a developmental phase, but when transportation infrastructure is improved, the tourism industry will become even more attractive and this automatically has a bearing on hospitality,” says Bennett Otto, Public Relations & Marketing Manager, Jumia Travel Ghana.
“International tourists should enjoy a seamless transportation experience which can compete with whatever system they are used to in their home countries. Every tour is much more enjoyable when you can move from one attraction to the other without much hassle. How about putting some money in ‘tourist taxis’.”
For the big money investors, Ghana’s railway transportation business would be a very lucrative one. Through private/public sector partnership agreements, investment in light rail systems deliberately constructed to serve communities in different parts of the country hosting tourist sites is sure to be easily profitable.
Another beautiful thing about growing investment in the transportation sector is that it will drive positive change in the hospitality industry and other support industries such as insurance, maintenance, and so on.
About nine years back, Ghana began experiencing challenges with its electrical power supply. It was named Dumsor Dumsor. When it started, the then president of the country, John Mahama, blamed it on the dwindling level of water in the Akosombo Dam, a phenomenon that may, in turn, be blamed on climate change. In January 2015, during a state visit to Germany, the former president again blamed Nigeria for failure to supply an agreed the quantity of gas through the West Africa Gas Pipeline to power Ghana’s thermal plants which supplies a little over 20% of the country’s electric power.
Despite the efforts by the authorities, the power problem persists, creating solid opportunities for investors in this regard. Dumsor Dumsor has prompted many hotels to start thinking of alternative sources of electric power to keep operations seamless and customers satisfied. An easy default is diesel or petrol engine generators, but the cost of fuelling can also be overwhelming. Also, when issues of clean energy generation are thrown into the mix, the alternatives are the likes of solar, wind, and bio energy production.
“With the climate in Ghana, solar energy seems more economical and will help hotels and other hospitality businesses reduce the costs of electric power, which usually makes their overhead costs high,” Otto suggests.
Solar resource is abundant in Ghana. The monthly average solar irradiation is between 4.4 and 5.6 kWh/m2/day (16-20 MJ/m/day), with sunshine duration of between 1,800 and 3,000 hours per annum. All these statistics makes the business of solar panel sales, installation and services, especially to hotels and guesthouses very lucrative.
The rapidly-developing food tourism potential of the country is another talking point in this conversation. An academic research work by Francis Eric Amuquandoh and Ramos Asafo‐Adjei published in the British Food Journal beams the light on this opportunity. The study titled Traditional food preferences of tourists in Ghana reveals that the observation that international tourists on holiday in Ghana patronise a great variety of Ghanaian foods suggests that there is a substantial market of food‐interested visitors that needs to be nurtured.
The study suggests that the current awareness and interest in Ghanaian foods need to be sustained by improving on the packaging, service quality, and sanitary conditions of most eating places, as well as the efficiency of regulatory institutions including the Food and Drugs Board, the Ghana Standards Board, and the Ghana Tourist Board.
One thing everyone cannot do without is food. Food becomes all the more important for tourists and travellers because they have left the comforts of their familiar territory. For this reason, a good restaurant becomes inevitable to an average traveller. Along with the rivalry with Nigeria over who makes the best jollof rice, Ghana is upping its game in the food tourism department. With quality and focused investment in that sector, the inadequacies in that sector could be swiftly turned into glory. Gradually, courtesy of Lebanese nationals, Chinese nationals and others from outside of Africa, exotic restaurants are springing up in Accra, the country’s capital. Yet, there is a need for more Ghana-themed restaurants to ensure that the glory of Banku, Shitor, waakye and its cousins are taken to other parts of the world like their big brother, Jollof rice.
Starting a restaurant business is easy in Ghana because of the viable agricultural landscape existing in the country.
Cultural Events Marketing
Like tour operation and destination marketing, events marketing is also a key entry point into the hospitality industry. Strategically packaged cultural events attract thousands of visitors and media attention to the country, the main focus usually being on the hospitality industry. During such events, a sharp increase in tourism, revenue and a big boost to profits for all of the businesses in the area have been observed. A well-planned and consistent event will surely have ripple effects as it will generate a lot of reviews which would, in turn, attract more people to the next edition.
“Event marketing leaves a lasting, brand-focused impression of fun by grabbing the attention of a group of people who are gathered together,” says Otto. “With good service by hotels and restaurants, everyone walks away with a good impression and will always come back … or recommend to others.”
No wonder in the past years, the Ministry of Tourism, Culture, and Creative Arts organised events such as World Tourism Day, World Chocolate Day, Emancipation Day, Paragliding Event, and PANAFEST to help promote tourism in the country.
FInally, with travel and tourism contributing GHC 4.9 M ($ 1.2 M), which is 3% of the country’s GDP in 2016, and a forecast that this will to rise by 5.6% to GHC 5.2 M in 2017, and by 5.1% per annum to GHC 8.6 M ( $2 M) (2.9% of GDP) by 2027, the future can only get brighter.
“Ghana has great potential in Tourism & Hospitality…,” CEO Jumia Travel, Paul Midy said in his introduction to the Jumia Travel 2017 Hospitality Report on Ghana.
However, the country’s citizens are the greatest assets it has in a bid to make the hospitality sector a mainstay of its economy. After all, in many countries, tourism acts as an engine for development through foreign exchange earnings and the creation of direct and indirect employment. Tourism contributes 5% of the world’s GDP. It accounts for 6% of the world’s exports in services being the fourth largest export sector after fuels, chemicals and automotive products. Tourism is responsible for 235 million jobs, or one in every 12 jobs worldwide, says the World Tourism Organisation’s article on Tourism and Poverty Alleviation.
In Ghana alone, travel and tourism generated 288,000 jobs directly for Ghanaians in 2016 (2.4% of an increase from total employment of 2.6% in 2015) and it is forecasted to grow by 4.7% in 2017 to 301,500 (2.5% of total employment). This underlines the fact that harnessing the quality of genuine African hospitality among Ghanaians through warm reception of tourists would make the country even more poised for greater success in the hospitality sector. It will always result in a win-win situation, even though it may be challenging to achieve.
“Focusing the wealth-creating power of tourism on people most in need remains an immense task and opportunity,” the UNWTO article reflects.
The government of Ghana is putting in effort; investors in the private sectors are not lagging behind, and the citizens are doing as much as they can, but room for improvement can never be crowded. Hospitality consultant and serial investor in the Ghanaian hospitality sector, Gilbert Abeiku Aggrey (Abeiku Santana), agrees with this position.
“A visitor to Ghana will fly in (travel), stay in a hotel and eat in a restaurant (hospitality), as well as visit a few monuments and sites (tourism),” Abeiku Santana says. “Although each of them operate individually, they cannot succeed in isolation.”
In order for the nations hospitality sector to achieve sustainable development while building on the numerous opportunities therein, all stakeholders plugging into the sector must cooperate to ensure that visitors to the land of Black Stars get an experience to be cherished for a lifetime.