August 14, 2014

HVS publishes African Hotel Valuation Index

Dami Adepoju

HVS, a global hospitality consulting firm, released its 2014 African Hotel Valuation Index, the first of such indexes.  This Hotel Valuation Index measures changes, and relative hotel values, across 14 of the more relevant markets on the continent.  It also ranks the calculated average hotel value of each market to the African average.

The 14 markets surveyed on the index include major economic hubs on the continent, such as Lagos, Abuja, Cape Town, Johannesburg, Nairobi, Luanda and Accra.

Of the cities surveyed, Luanda showed the highest growth in hotel values in 2013 at 15.3 per cent.  Nairobi and Abuja showed the second and third highest increases in values, with 11.7 per cent and 9.3 per cent, respectively.  The overall African average is a more conservative 5.7 per cent.

This annual growth in hotel values tells a real story of the trend in values, indeed, a much clearer story than the actual values themselves.

Hotel Values - Percentage Change 2010-13 Source:  HVS - African Hotel Valuation Index
Hotel Values – Percentage Change 2010-13
Source: HVS – 2014 African Hotel Valuation Index

Seychelles achieved the highest value per room in 2013, at US$522,000, which is no surprise given that the island is a luxury destination, with high barriers to entry.  Thus, it showed a minimal 2.4 per cent change from the previous year.

Nairobi has seen very strong changes in its hotel values since 2010, owing to political tensions and security risks, and the market’s recovery efforts to correct downswings.  The average hotel value in Nairobi is currently estimated at US$161,000, increasing by almost US$17,000 from the previous year.  Following the security challenges the city experienced in 2013, it remains to be seen whether this upswing will be sustained in 2014.

Abuja saw a 9.3 per cent increase in hotel values from the previous year, largely due to a limited supply of  relevant hotels and an equally limited pipeline.  Overall, the average hotel value in Abuja  has consistently risen from 2009 values, to reach US$492,000 in 2013, an increase of over US$87,000.

Luanda remains one of the top performers, both in terms of the percentage change in values and the average hotel values.  Luanda has a markedly limited supply of relevant hotels and high demand, stemming from interest in the country’s natural resources.  The pipeline is also very limited, due to high barriers to entry and the relative difficulty of doing business there.  This situation is not expected to change much in the following year, and the market will likely remain a top performer in the 2015 index.

Hotel Values per Room 2009-13 (US$) Source:  HVS - African Hotel Valuation Index
Hotel Values per Room 2009-13 (US$)
Source: HVS – 2014 African Hotel Valuation Index

Download it here – HVS – 2014 African Hotel Valuation Index

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