Nigerian Hotels are the most valuable on the African Mainland

Tourism destination competitiveness depends on a viable recreation and hospitality facilities and for the mega trends in Africa’s hostel industry, growth is at an impressive rate with the establishments of quality services to patrons in growing number of destinations.

Competition among local and international hotel groups have led to the application of cutting edge technologies and innovation in the construction and refurbishment of hotels to meet patrons demands and attractive a good number of them.

Due to its blooming tourist attractions, the African continent is making wave in meeting hospitality demands by expanding its services in this area, providing varieties of hotel types to accommodate its heterogeneous patrons. According to the 2014 hotel pipeline report by W Hospitality Group, of the 215 hotels in the pipeline for Africa, 142 hotels (almost 70%) are in the sub-Saharan African region.

According to the African Traveller Hospitality Outlook 2015 2019 by PricewaterhouseCooper’s, an overview of how the hospitality industry in South Africa, Nigeria, Mauritius and Kenya is expected to develop over the coming years.

South Africa, Nigeria, Mauritius and Kenya have very different markets. South Africa attracts a mix of business and holiday travellers and offers a wide range of hotel classes and accommodation.

Nigeria is principally a business market with relatively little holiday tourism. Mauritius is principally a resort market with most travelers coming on holiday and where five-star hotels constitute a significant component of available rooms and total spending.

While Kenya has a mixed market, which predominately attracts tourists through its beaches and safari offerings as well as business travellers, principally to Nairobi. Growing trade between Kenya and China is supporting the business market.

In the report, Nigeria was forecast to be the fastest hotel growing market over the next five years with a projected 10.5% compound annual gain. Virtually all of that gain is expected during the latter three years of the forecast period.

As a business destination, the domestic economic climate is an important attraction in Nigeria. Though hotel market in Nigeria was adversely affected by terrorist activity in 2014 and was also hurt by the outbreak of Ebola in West Africa, Nigeria’s economy had been booming, buoyed in large part by regional and international investment, but the sharp decline in oil prices also affected the industry in the country.

However, the country’s economy is a booming one with hotel room revenue rising by 59% between 2009 and 2013. Although, when analyzed by the percentage of deals that were actually under construction, Nigeria lost its number one position and fell to number four, behind Angola, Egypt and Morocco in the Hotel Chain Development Pipeline in Africa 2016 report.

Irrespective of this, Nigeria maintained its number one position on the top 10 list for hotel deals signed, with 61 hotels and over 10,000 rooms planned. More recent is the African Hotel Report 2017 where it is noted that Nigerian hotels are the most valuable hotels on the African mainland.

Nigeria is the most significant hotel market in west Africa, with almost 6,100 branded bedrooms across 41 hotels, with 21 brands (and 14 hotel companies) represented in 9 cities. With a population of almost 192m, growing at an estimated 2.6% per annum and with the largest economy on the continent, it is unsurprising that more hotel projects (61) and more branded bedrooms (10,313) are proposed here than in any other country on the continent.

According to David Harper of Hotels Partners Africa, the report’s author, “despite the economic problems experienced by the market in recent years that have seen values fall by 16.4% in the last two years, average values are the third highest in all of Africa behind Seychelles and Mauritius”.

The hotel industry in Africa is still a very good investment, despite the cyclical nature of the property market. Investors can make the most of this very promising investment opportunity, while avoiding some of the potential pitfalls that can ensnare the less experienced hotel investor.