Why Africa's mid-market hotel sector is enjoying a boost
The surge in travellers arriving in Africa has brought an unexpected boost to middle market hotels, according to a report published yesterday, with mid-scale lodges and serviced apartments two of the sectors enjoying a surge.
The report published yesterday on www.hotelmanagement.net says: “The growing trend is spreading across the continent’s city centres, including Lagos, Nairobi and Johannesburg.”
“The hotel market in Sub-Saharan Africa has evolved in the last decade with many global operators opening quality hotels in key markets like South Africa, Mauritius and Kenya,” Xander Nijnens, EVP, hotels & hospitality group Sub-Saharan Africa, JLL, said in a statement.
With a more than 70-percent occupancy this year across the region, Africa’s current hotel stock has been growing thanks to increased investment. West Africa, in particular, has seen an 8 per cent rise each year in room supply over the last 10 years.
And there was some suggestion that while luxury four and five-star hotels have increased, now investors are turning their attention to mid-scale market development opportunities.
“We are already seeing much more regional corporate travel, which was previously met by informal accommodation–guesthouses, lodges, for example,” Nijnens said. “Now, these travelers are looking for the quality and reliability that the branded mid-market and budget sectors can offer.”
In response, hotel operators are expanding their mid-market footprint. Regional operator Onomo has an inventory of three-star hotels across West Africa and South Africa. However, the company has set plans to step into the East African market with its mid-scale brand. City Lodge, another Africa-based regional operator, started its expansion throughout the region years ago. Smaller regional brands Urban and City Blue have been setting up their own expansion plans, as well.
Meanwhile, global hotel operator Carlson Rezidor Hotel Group has four upper mid-market hotels in the pipeline for Kenya set to open over the next three years. Marriott International signed seven new hotels in East Africa and West Africa. Hilton also has its hotels planned for the region opening within the next five years after a renovation and rebranding.
“Much of the future branded pipeline will be driven by the operators’ mid-market brands. In the long-term, the bulk of hotel demand for these hotels is projected to come from domestic and regional travelers,” Nijnens said.
Africa’s hotel industry continues to face impeding obstacles despite its rapid growth. Regional markets have been coming up against ineffective debt funding and excessive development and land costs, on top of extended development approval processes and construction periods, pushing completion times back by three and five years.