Although Nigeria's chronic instability is once again in the news, with reports yesterday of strikes, and violent clashes between police and air force officers in Lagos, Southern Sun, which is owned by black empowerment hotel and gaming group Tsogo Sun Holdings, remains confident about its venture into the country.
Keith Randall, Southern Sun's operations director for Africa, pointed out that the group was not an investor in Nigeria, but had a management contract.
"There are always risks in operating in Africa. It's about getting the balance right between risk and reward," Randall said.
Meanwhile, an analyst, who declined to be named, said that as long as Southern Sun had entered into a management contract and was not investing capital, risk was reduced.
"The expansion potential in SA is limited and they find that Africa is a more lucrative market albeit at a higher risk."
Southern Sun executive chairman Ron Stringfellow said there was "vast opportunity" in Nigeria.
"Nigeria has great economic potential, with extensive oil and natural gas reserves, and is also a political power, playing a leading role in the continent's stand on crucial issues," Stringfellow said.
He said the management agreements might be the start of a greater expansion by the group into Nigeria.
The company has already highlighted what it sees as other opportunities in the western African country.
These include the introduction of more quality hotels in Lagos and other cities such as Port Harcourt, the hub of the oil-rich region.
"(There is a) serious shortage of good hotels to service the growing demand from the international and local business traveller," Stringfellow said.
It is intended that the two Lagos hotels Southern Sun will manage will be separately branded, as a Holiday Inn and a Southern Sun Hotel.
The Holiday Inn will be a four-star facility with 150 bedrooms, while the Southern Sun Hotel will be a four-star deluxe hotel with 100 rooms.
The hotels are being developed by the Nigeria -based Beta Consortium on the site of the old Ikoyi Hotel.
This is the first phase of a multi-purpose development that will include apartments, an office block and a shopping mall. The mall will include six cinemas, restaurants and other entertainment facilities.
It will also include a five-star hotel, which the Beta Consortium would like branded as an InterContinental Hotel.
The group said Nigeria could be the base from which Southern Sun might work to build up its presence in other west African oil-producing countries.
Stringfellow said the group was "already looking at a number of other countries along the west African coast, in particular Ghana and Angola".
Southern Sun operates 82 hotels in seven African countries including SA, Rwanda, Zambia, Tanzania, Kenya, Mozambique and the Seychelles, and has more than 13000 hotel rooms in its portfolio.
There was also a focus on the United Arab Emirates, Stringfellow said, with emphasis on fast-growing Dubai.
