Hotel development in Africa jumps 30 percent as investors’ confidence continues to grow

Despite a slowdown in economic growth due to slump in the prices of commodities, investors remain confident about the future of Africa’s hospitality industry, with the number of planned hotel rooms in Africa soaring to 64,000 in 365 hotels, up almost 30 percent on the previous year, new figures from the annual W Hospitality Group Hotel Chain Development Pipeline Survey show.

“The evidence from our survey is clear – investors remain confident about the future of the hospitality industry on the continent. Even when pummelled daily by low commodity prices, exchange rate problems, political challenges and poor infrastructure, Africa remains resilient,” said Trevor Ward, W Hospitality Group managing director.

The increase in the number of planned hotel rooms is largely due to strong growth in sub-Saharan Africa, which is up 42.1 percent on 2015, the group said.

The W Hospitality Group survey is published ahead of the African Hotel Investment Forum (AHIF), which is organised by Bench Events. The conference attracts all the major international hotel investors in Africa and is being held for the first time in Lomé on 21-22 June. A second AHIF will also take place in Kigali, Rwanda on 4-6 October.

The IMF forecast for economic growth in sub-Saharan Africa is for an increase of 4% this year and 4.7% in 2017, up from 3.5% in 2015. Overall this is down on the 5-6% increase enjoyed over the past decade, but it’s still double or more the forecast for the world’s advanced economies, such as Europe, the USA and Japan.

Matthew Weihs, managing director of Bench Events, said:  “Africa is still on the up. For business, trade and capital investment, the continent remains an attractive proposition, leading to continuing demand for accommodation and other hospitality services.”

The 2016 survey provides a full picture of hotel development across the continent – 36 hotel chains and 86 brands with more than 64,000 rooms in 365 hotels.

Overall in the 2016 report, it’s Angola that dominates. In July last year, AccorHotels signed with AAA Activos LDA for the management of 50 hotels with around 6,200 rooms.  All are under construction and many are ready to open.

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Across the continent, the north-south divide on hotel development continues. In 2011, the number of pipeline rooms in the five countries of North Africa was about 25 percent higher than that in sub-Saharan Africa. Today, it is less than half.

Trevor Ward explained: “There are two reasons why development activity in North Africa is now somewhat subdued. Firstly, the markets there are more mature and have already seen much development, so there are fewer opportunities for new hotels. Secondly, there is the political turmoil – in Libya, which has seen a 40% drop in the pipeline, and also Egypt, parts of which are experiencing drastic reductions in the number of tourists.”

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Nigeria remains the country with the most rooms in the pipeline, up 20 percent on 2015.  Together with Angola, the two countries account for 17,782 rooms between them, almost 30 percent of the total pipeline and 40 percent of the signed rooms in sub-Saharan Africa.

Despite the promising 2016 survey findings, Trevor Ward cautioned on the number of hotel deals that have been signed but have so far not opened, for a variety of reasons but primarily a lack of finance. “Between 2006 and 2013, 104 deals with 21,377 rooms, over 30% of the total, were signed and should now be open, or at least well under construction”.

“If all those involved – the investors, chains, consultants and lenders – can bring these deals to fruition, the pipeline of the future will result in the much-needed expansion of Africa’s hotel industry,” Ward said.

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