Marriott International has signed an agreement for the acquisition of South African hotel company, Protea Hospitality Holdings.
The companies signed a letter of intent with regards to the deal, with Marriott planning to take control of Protea’s management business, which currently consists of 116 hotels across three brands, with an inventory of more than 10,000 rooms in South Africa and six other Sub-Saharan African countries.
The acquisition would nearly double Marriott’s portfolio in Africa to more than 23,000 rooms.
As part of the transaction, Protea will also create a new property ownership company to retain control of its owned hotels, which would then be managed by Marriott.
“Africa has significant untapped potential for travel and tourism, both as a destination and source of new global travellers. The continent’s GDP is anticipated to grow at over 5% annually over the next several years which we expect will raise more people into the emerging middle class. With the Protea Hotels acquisition, our expanded footprint should allow us to become the first choice of Africa’s rapidly growing population of young, sophisticated travellers,” said Arne Sorenson, president & CEO of Marriott International.
“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,” he added.
Founded in 1984, Protea currently manages, franchises and leases hotels across the upscale Protea, boutique Protea Hotel Fire & Ice, and luxury African Pride brands. As well as South Africa, the company has a presence in Malawi, Namibia, Nigeria, Tanzania, Uganda and Zambia.
“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,” said Arthur Gillis, CEO of Protea Hospitality Group.
The letter of intent signed this week is non-binding, but Marriott said it expects to sign a definitive agreement by year-end 2013 and complete the transaction in the first quarter of 2014. The potential value of the deal has not been disclosed.