REPORT: Africa's Hospitality Market - Year in Review 2016
“Last year saw hotel investment in Africa made progressive strides,” says the boss of HTI Consulting. “There were new hotels launched in new countries and cities across the continent and in which factors such as economic and political events, currency volatility and fluctuating tourism demand brought both challenges and opportunities to hotel markets across the region.”
The Year In Review by specialist hospitality, real estate and leisure consulting company, HTI Consulting, offers its summary of the top five and bottom five performers across 13 African cities for 2016, as indicated by STR Global.
Four of the top five cities were in southern Africa and three were in South Africa. Cape Town achieved the highest growth in occupancy of the 13 cities assessed. “Continued growth in international leisure tourism and the introduction of more direct international flights has facilitated growth,” says the report.
Lagos showed the second highest growth but the report notes that growth was not sufficient to offset the 11.4 per cent occupancy decline experienced at the end of 2015.
“Government business as well as ICC related activity drove positive occupancy growth in Durban and its surrounds whilst domestic leisure continued to sustain the market. Lusaka hosted a number of conferences in 2016 which contributed towards more positive occupancies.”
At the other end of the hotel occupancy figures, Accra and Addis Ababa experienced the largest occupancy decline in 2016. The negative growth in Accra was driven by high levels of new supply (37.8 per cent increase). Despite this trend, demand for accommodation in Accra is increasing and “declining occupancy is expected to be a short term trend,” says the report.
New supply in Addis Ababa (136 roomed Ramada Hotel), combined with a decrease in demand placed significant pressure on market occupancy. A change in Government policies in Tanzania has also weakened investor confidence. This, combined with a shift in government demand to more affordable accommodation, reduced occupancy in Dar es Salaam. Weak investor sentiment in Zimbabwe continues to limit opportunity for growth in the Harare hotel market.
The report also looks at future supply with the pipeline under construction is highest in Addis Ababa. Nairobi also has a strong development pipeline, “however recovery in the tourism sector is evident” and “the long term outlook is positive”.
Cape Town’s booming market is likely to slow in the short term, particularly in the midscale and upscale space as new supply comes on-line. However, should the market continue to grow at its current pace, the impact of new supply will be short term. Accra and Lagos have shown demand recovery in 2016. It is hoped that continued growth in market demand will limit the impact of growing supply.
The report names its top three tips:
Cape Town – Growth in occupancy, ADR (USD terms) and room nights sold combined with no new room supply.
High levels of new supply planned in the short term, however occupancy only likely to be effected in the short term provided demand growth continues.
Durban – ADR growth in local currency, occupancy growth and room nights sold growth. – Diverse markets including domestic leisure, government and DICC related demand.
Limited new supply planned.
Accra – Room nights sold growth indicates market recovery (22.4 per cent increase in demand).
High levels of new supply could prolong subdued market conditions.
If market recovery continues, new supply could be absorbed at a faster pace than anticipated.
Hospitality and Tourism International Consulting “HTI Consulting” is a niche, specialist hospitality, mixed-use, real estate and leisure focused consulting company formed in 2003. To-date more than 350 assignments have been completed covering 38 countries in Africa and the Middle East.