BETHESDA, Md.—Marriott International said it has signed a letter of intent with Protea Hospitality Holdings of Cape Town, South Africa to acquire Protea Hotels’ brands and its management business that operates or franchises 116 hotels across three brands with 10,184 rooms in South Africa and six other Sub-Saharan African countries. The transaction would nearly double Marriott’s distribution in Africa to more than 23,000 rooms, and would also provide Marriott with a proven operational platform and leadership team to accelerate Marriott’s expansion plans in the African hotel market.
Protea Hotels, founded in 1984, manages, franchises, and leases hotels across the Protea Hotels brand (104 hotels); the lifestyle boutique Protea Hotel Fire and Ice! brand (2 hotels); and the African Pride Hotels collection (10 hotels). In addition to its 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 owns (and enter into long-term management and lease agreements with Marriott for these hotels). It would also retain a number of minority interests in other Protea managed hotels. At closing Marriott would manage approximately 46 percent of the rooms, franchise approximately 40 percent of the rooms, and lease approximately 14 percent of the rooms.
Arne Sorenson, president and chief executive officer of Marriott International, said, “Africa has significant untapped potential for travel and tourism, both as a destination and source of new global travelers. Protea Hotels enjoys unparalleled brand recognition in Africa, and our combined portfolio of Protea Hotels and current Marriott International brands would create a platform for accelerated growth and new job growth in South Africa and across the continent.”
Alex Kyriakidis, president of Marriott International for the Middle East and Africa, said, “The development cycle for opening new hotels in Africa is typically long due to the challenges posed by emerging infrastructure, so joining forces with Protea Hotels and their highly respected management team is the strongest way to jumpstart Marriott’s footprint in Africa.”
Arthur Gillis, chief executive officer of Protea Hospitality Group, said “Protea Hotels has grown organically to become the largest and leading hotel group in Sub-Saharan Africa. Aligning with a global giant such as Marriott ensures we can realise the Group’s full potential for all of our stakeholders. In Marriott we have found a perfect fit across culture, values and commitment to industry leadership which will ensure that we remain at the forefront of African hospitality.”
The proposed terms of the transaction are not being disclosed at this time. The parties stated that they plan to sign definitive agreements by the end of the year, and the transaction could close in the first three months of 2014.
