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Africa’s big five: the countries leading hotel growth

Tourist arrivals to Africa are expected to double by 2030, presenting a big opportunity for hoteliers. Click. takes a look at the countries at the forefront of this boom

The predicted increase in tourism to Africa is prompting an influx of brands rapidly expanding their portfolios across the continent. Knight Frank’s Africa Hotels 2018 report predicts annual international tourist arrivals will double by 2030, reaching 134 million and boosting the economy by 60% to US$3.8tn in the same year.

Hotel giants like Radisson Hotel Group, Hilton and Marriott have ramped up their development strategies to grow their presence in Africa, reinforcing the hotel sector’s potential for business growth across the continent.

South Africa

South Africa continues to attract hoteliers and investors, despite already being home to almost 30% of the continent’s branded hotels. Hotel room revenue within the country is expected to grow 5.6% to R21.8bn by 2022, compared to the R16.6bn recorded in 2017, says PwC’s Hotels Outlook 2018-2022 report. The report also predicts occupancy rates will continue to grow over the next five years, reaching 62.5% in 2022.

“There’s been continued work in South Africa around easing the visa regulation to make it easier for people to travel to the country,” says Pietro Calicchio, Hospitality Industry Leader for PwC, Southern Africa. “We’re also seeing more airlift in South Africa, which is always a positive sign because if it’s easier to get to the country it will hopefully attract more people.”

The Radisson Hotel Group also predicts growth for the country, planning to add more properties to its South Africa portfolio. “We still see a lot of opportunity in South Africa,” says Andrew McLachlan, Senior Vice President, Development, sub-Saharan Africa. “In Cape Town we currently have six hotels, but we think there’s space for another four. In Johannesburg we have three hotels, but there’s the opportunity to grow by at least another seven across our brand scape from 3 to 5 star.” 

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Hotel bar
Photo: credit to Radisson Hotel Group

 

Nigeria

Several new hotels are scheduled to open over the next five years in Nigeria, particularly in the country's largest city, Lagos. It’s estimated by Jumia Travel’s 2018 Nigeria Hospitality report that between 2018 and 2028, the tourism industry will contribute 4.3% to the country’s GDP (N3.61bn) year-on-year.

“We forecast Nigeria to be the fastest growing country,” says Calicchio. “This is because there is a lot of planned investment there from a hotel point of view. There’s also a lot of local travel and business travel happening. I would say the growth momentum in Nigeria is mainly due to improvement in economic conditions within the region.”

Radisson Hotel Group believes the opportunity in Nigeria could be due to the increase in business travel across the continent. “In Lagos, Nigeria, we have a mix of domestic and international business depending on the brand, day of the week and time of year,” says McLachlan. “We believe there’s still a lot of opportunity in Nigeria for all our brands and not just in Lagos or Abuja.”

Kenya

Tourism in Kenya is also expected to enjoy the hospitality growth of Africa, with international tourist arrivals forecast to total 2.1 million by 2028, according to the World Travel & Tourism Council's Travel and Tourism Economic Impact 2018 Kenya report. “If you think back a few years ago to the terrorist attacks in Kenya, that definitely impacted the tourism market quite a bit,” says Calicchio. “Now that the safety concerns are gone again, there’s definitely been growth in the tourism market and there’s also continued investment within the hotel market there.”

Kenya is also seeing a lot more business and domestic tourism. “A city like Nairobi, Kenya’s capital, has the benefit of a good mix of business, MICE and leisure travels because it’s the hub for East Africa,” says McLachlan. “International leisure travellers use the city as a base due to great airlift into the region before they go on safari and beach vacations.”

Ethiopia has seen a massive increase in pipeline deals, signed by both international and regional chains.

Mauritius

Mauritius has had the fastest-growing hotel market during the past two years due to a strong local economy and large increases in tourist arrivals, according to PwC. Mauritius, alongside the Seychelles, was the top performing market in Africa in 2017 and is expected to remain the continent’s number one in 2018.

As a result, opportunities for the home segment are also beginning to emerge on the island. “The home sector has definitely made an impact in Mauritius,” says Calicchio. “Whether you’re renting a beach house or small villa, there’s definitely been growth in that market too, with an increase in the availability and utilisation of apartments and similar lodging.”

Alongside the home segment, luxury resorts are expected to continue to thrive. “We believe Africa offers a great opportunity for hotel groups like ours to grow our resort portfolio, which is a very important segment in our business and today Mauritius leads the way for us,” says McLachlan. “We have two very successful resorts on Mauritius, and we think there is scope for more in Mauritius, Seychelles, Madagascar, Zanzibar and Cape Verde.”

Ethiopia

Ethiopia is currently leading hotel development in East Africa, according to the latest annual hotel pipeline survey by W Hospitality Group. Up from 20 hotels in 2017 to 31 hotels in 2018, Ethiopia has seen a massive increase in pipeline deals, signed by both international chains such as AccorHotels and Hilton, and regional chains.

"Ethiopia has a population of over 100 million people, and it has the second fastest growing GDP growth in the world, fastest growing GDP in Africa and, at this stage, it has less than half a dozen branded hotels in the capital city and financial hub, Addis," says McLachlan. "So, with a huge population and growing economy we see Ethiopia as a country where we can have hotels under our brands in more than just the Addis, we can also grow into some of the larger towns."

If you like this, you might also want to read 'Shining a light on Africa'

Hero image: Radisson Hotel Group

Takeaway
  • Annual international tourist arrivals to Africa will double by 2030, according to Knight Frank’s Africa Hotels 2018 report
  • Hotel room revenue within South Africa is expected to grow 5.6% by 2022, says PwC
  • Radisson Hotel Group believes there’s a lot of untapped potential for hoteliers in Nigeria
  • Mauritius has had the fastest-growing hotel market during the past two years, according to PwC
  • Ethiopia is currently leading hotel development in East Africa, according to the latest hotel pipeline survey by W Hospitality Group

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