PROVIDENCE HOTELS: Supporting Hospitality with Full-Service Experience
Supporting independent hotels to achieve the highest possible asset value and sustainable profitbility while helping to create memorable guest experiences that last forever, the innovative approach to independent hotel management from Providence Hotels is yielding great results. MD Neil Hughes talks to Enterprise Africa about celebrating brand individuality and championing South Africa as a premium destination of choice for international travellers.
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International tourism has returned to South African shores with a bang. After the decimation of the industry through 2020 and the Covid-19 pandemic, there was major concern over this valuable industry’s long-term viability in the country, contributing 3.7% of GDP in 2019. However, the forecast from World Travel and Tourism Council’s Economic Impact Report (EIR) shows the South African Travel & Tourism sector is forecasted to grow at an average rate of 7.6% annually over the next decade, significantly outstripping the 1.8% projected growth rate of the country’s overall economy.
But South African resilience is world renowned, and while the country’s tourism sector may have been down for three years, it certainly wasn’t out. In 2023, after a long stint of subdued and inconsistent arrival trends and lots of pressure on local businesses trying to reboot, the industry recorded fantastic statistics reinforcing the enduring appeal of the rainbow nation as a bucket list destination for many around the world. Foreign arrivals (mainly from the UK, Germany, Netherlands and the USA) increased 46.5% from June 2022 to June 2023, and by the end of 2023 more than 7.6 million tourists arrived in the country. Particular highlights included strong numbers from the US markets, a market targeted in a global campaign from the Tourism Business Council and bolstered by renewed airline into destination South Africa.
On the ground, the industry is, thankfully, moving on very well and is embracing the changes that have become part of the new global travel and tourism normal.
This beloved tourism and hospitality sector is the space in which Providence Hotels operates. An independent full-service hotel management company working across South Africa, the UK, and other markets, Providence Hotels can ignite value and potential within a hotel and serves as the catalyst for owners of independent hotels to ignite growth and development to the next level with a reliable and trusted international professional hospitality partner.
GROWING PIPELINE
“There are a lot of good things happening here in South Africa right now. International hotel groups are finding more and more reason to develop and build their brands across the continent, starting in South Africa, and Providence Hotels has a strong relationship with many of the top global hotel groups to manage their brands under third party agreements on behalf of the owners in order to assist with this growth.” MD Neil Hughes tells Enterprise Africa. “For any hotel business in our position, it is always good to be able to connect with hotel owners that need immediate assistance. Maybe they have been trading for a while and maybe their teams have reached their glass ceiling and are looking to evolve their businesses to take the next step in their commercial, structural and market understanding – that is where we come in.”
Providence Hotels can offer full-service solutions to any size hotel or alternatively merely strategic advice and support, operational oversight and guidance, revenue optimisation consultation or digital and online support to name a few. Independent hotel owners and hotel groups have entrusted Providence Hotels to come along side them and take their hand in driving growth and development within their businesses as well as their professional teams and structures.
“We position ourselves alongside hotel professional teams and together with the owners to help them re-establish their company visions and objectives and understand why they need to adopt, adapt and change,” smiles Hughes. “Change is the enemy for a lot of people, and breaking down these walls so that people can understand their WHY is essential. Evolving a professional team and owner mindset is indeed chellenging but our performance and results, over time and through consistency, brings comfort, trust and profitability to all stakeholders.”
Hotel operations are complex. Whether a large international brand active across sub-Saharan Africa or individual lodge in the Cape winelands, the long list of inputs required for a hotel to run successfully is difficult to achieve independently and without constructive professional support. Providence Hotels is home to a range of skills and expertise thriving on solving problems for owners, franchisees, and delivering regional solutions for international brands which is often missing – especially when operating together with larger brands and properties with zero to few boots on the ground.
“We can work together with big brands and their globally paced systems under a third-party management structure and have very good relationships with global brands to operate selected brands within their brand architecture. What this means is that the owner would franchise a selected international brand and then contract Providence Hotels to operate the brand on their behalf if they don’t have the experience or ability to do so,” says Hughes, adding that the client then gets the best of both worlds – an on-the-ground local operator that understands the local dynamics and nuances of the market, alongside a recognised global brand and their global distribution systems and loyalty programs.
“Sometimes, the big brands don’t bring that local knowledge, and they don’t yet have a full understanding of local dynamics, and they sometimes send their expats in to deal with these things – who also don’t understand the local culture and often fall short of the mark. We saw this very clearly during the COVID pandemic where local owners were pulling on their international operators and very often their executives could not answer because they either didn’t understand or were not in situe to assist. A very big benefit of going the third party management route is that owners get the distribution and global loyalty reach and power from the big brand that is then combined with a company like Providence Hotels as the local operator who brings advice, understanding and real-time tactical support because they are on the ground – a very powerful combination indeed!”
These collaborations are not understood well enough in South Africa and are essentially all about growing hotel values and client operations within the South African hospitality industry. Tourism brings in a vital economic contribution of foreign currency into the local economy and this very often converts into more substantial Foreign Direct Investment due to international visitors falling in love with the country.
Providence Hotels has hotels and consulting agreements across South Africa and also the UK and is actively looking to grow its portfolio of hotels under management agreements aggressively going forward in both regions. “I’ve been in the hotel and hospitality business for more than 25 years now and there is nothing more exciting to me than seeing the sector thrive through active collaborations. There is a place in the sun for everyone and we are stronger together,” adds Hughes. “The hotel sector has become a less desirable industry to work in and we need to change that perception in the minds of the local youth and working class and bring back the appeal and glamour of the industry to the next generation. The ‘old guard’ will only be around for so long so we need to all become advocates in our circles of influence to do more to elevate hospitality back into something special and a vocation worth pursuing.”
DYNAMIC & AGILE
By trusting an outsourced hotel management company to operate a hotel, owners can take advantage of multiple services but with one single contact and relationship. It’s a more streamlined and simple approach in a sea of complexity, and Hughes highlights the dynamic nature of the hospitality business and why it is so absolutely important to surround yourself and your teams with partners, like Providence Hotels, that understand your values and objectives and how to lift them up while driving revenue and cost optimisation initiatives across the business.
“Being in the independent space focuses us on being more dynamic and more agile than our competitors,” he says. “Big international hotel brands cannot necessarily adapt fast enough to the nuanced market challenges that we have in South Africa and in the rest of the African continent, and the ones that chose to partner with local operators, albeit through collaborations or partnerships, were the ones that were able to get through their local challenges relatively better and often more unscathed. While the pandemic is thankfully a distant memory, it has been somewhat of a ‘wake up call’ for many and is still something we have to consider and pay attention to. The market has changed drastically over the last three years and client booking patterns have evolved because of it with shorter lead times and more experiential services being sought after. Habits have changed and we have been very fortunate to have partners here in South Africa and in the UK who have adapted and assisted us in evolving very quickly.”
Even so, selling the third party management concept in South Africa remains challenging as a consistently weak economic backdrop has depleted investment ability for many entrepreneurs and has forced independent hotel owners to, in most cases to their businesses detriment, restrict their executives teams access to out-sourced advise or management assistance and oversight. With all the benefits available, many still remain cautious about the cost of the out-sourced and services that are still relatively new and misunderstood within South Africa.
“We help to unscramble the eggs and realign independent teams to face their new and more profitable ‘true north’. We bring fresh ideas and focus for hotel owners around understanding of what their assets should be achieving. This year, we are definitely developing further on our third-party relationships with the global brands and their potential benefits together with independent hotels in South Africa.
“There are not many established professional independent hotel operators in South Africa or Africa for that matter,” Hughes admits. “It is a first-world model, and the third-party model is not massively understood in here. Sometimes, owners see it only as another layer of cost and they don’t often see the many benefits attached to the cost and knowledge now at their disposal. There is a very clear lack of understanding and we want to educate our market on what this business model can bring to the table and assist larger independent hotels to better succeed in the South African context.”
GREAT SECTOR FOR WORK
Hughes remains an advocate for the tourism industry, even after many “hard knocks”.
Having started his career with Protea Hotels more than 25 years ago, now part of international brand Marriott, he grew within the company and succeeded in several operational roles before becoming one of the youngest hotel GMs in the group at the time. After this, commercial and hotel development was sought after and he moved into the group’s development arm, helping to identify new growth prospects and improve brand recognition across new and the then current clientele base.
After three years in development with Protea Hotels he joined Radisson Hotels in a business development position to assist in driving the Radisson brands growth into the African continent together with a very dynamic group of African developers. Joining Providence Hotels in 2019 to head the commercial growth of the business and assist in preparing the South African managenment company for aggressive management agreement awareness and growth across the independent hotel space.
“We are now signing management agreements in South Africa and regionally and also actively looking for more,” Hughes says.
As the company grows alongside the return of meaningful tourism in South Africa, Hughes is keen to promote the industry as one of prosperity and opportunity adding that he also sits on the Board of Federation of Hospitality Associations of SA (FEDHASA) – the most significant and oldest hospitality association in SA – and amplifies that it is up to those of us that are in industry leadership positions to prepare and equip the next generation of hospitality professionals.
This was recently made very apparent by the very successful launch and execution of the inaugural FEDHASA Hospitality Awards where the industry leaders acknowledged the current and next generation for their contributions to the industry.
Hospitality offers relatively low barriers to entry, can create jobs quickly, give sustainable career opportunities, and can lead to stronger earning potential for those willing to actively dedicate their time and efforts to becoming industry professionals. “This is something that FEDHASA and all of its sitting board members are very passionate about and we are looking for meaningful government and private sector participation in this regard to bolster this growth in awareness so that our guests and visitors remain well taken care of for many more years to come,” comments Hughes.
“The development of our local hospitality culture is so important. We need to elevate people and elevate the sector. It is a great sector to work in. As a vocation, it has been fantastic for me and to me, and it can also be for others willing to work for it. We want people to think positively about hospitality as a careerof choice and I want future graduates and young professionals to experience the industry as I have as intensely interesting, dynamic and worth while. I have personally worked very hard to get where I am but this industry has allowed me to travel the world and for this I will be eternaly greatful. We need to elevate the industry’s persona and ‘make it sexy again’ for the next generation to start contributing to it in a meaningful way, and that will take time and effort in South Africa.”
FEDHASA has partnered with Insignis Solutions and they are championing active private participation in equipping the next group of hospitality professionals through on-the-job and in situe education after achieving certain theoretical hospitality achievements.
“In South Africa the hospitality sector in terms of hotels and restaurants is a very underrated industry. It is not always a sought-after career with the working professionals coming through the ranks these days but it has always been a no-brainer for me. I have been in the industry my whole career and I have learned how a hotel functions and how its people come together and also how to navigate a way to the top of a commercial structure and into an executive position. The most challenging part of what I do now, apart from leading an amazing professional team at Providence Hotels in South Africa, is educating independent hotel owners and commercial property investors and REIT’s on why it is important to involve the right partners and professionals that can elevate their business and transcend the understanding of their people on the ground.” Hughes points out.
Key in this professional offering is engaging within and being a part of the South African supply value chain. Providence has a strong network of suppliers that deliver a range of services all designed to make the life of a hotel owner easier and the operation of the business more valuable.
“They have to be on the ground. They need to have at least an understanding of what is going on at the level we do,” explains Hughes. “We are a relatively small business and I expect all of our partners, especially in the digital realm, to understand the needs and requirements of our clientele and adapt accordingly. We have to be responsive, and I must be able to pick up the phone and speak to my partners, not a chatbot! Everyone sells a good story about their service levels but whether you can deliver on that makes the difference in the hospitality world and it’s important to remain relational,” Hughes adds.
Involving a local supply chain also forms a key part of the Providence Hotels strategy to support job creation and sustainability in South Africa. “We will always look for local first,” states Hughes. “However, we are not blind to the fact that there are very good international products out there. We are therefore always on the lookout for product affiliations and digital solutions both local and international so we are not closed to those opportunities. In hospitality, things have to happen quickly, and we must solve the problems of our clients and our sector without delay and therefore reliable local suppliers are most essential.”
With new airline routes being signed, for travellers looking to experience something spectacular and different, South Africa has it all. Doing so in comfort, style and without stress, Providence Hotels and its hotels are here to serve. It’s an exciting time for the business as tourism is expected to reach full recovery (measured against 2019) through 2024 and will continue to grow thereafter.
“Making sure customer experiences are unique and exceptional, offer value for money, are authentic and maintain our own brand and the South Africa brand online is important. Government and the private sector have a huge amount of work to do in reaching new heights together but once international guests have visited South Africa they most often than not are converted into brand ambassadors for life and ensuring these emotional connections will result in lucrative repeat business and FDI,” concludes Hughes.