The Hospitality sector across Africa remains resilient

While it was among the worst hit sectors at the peak of the pandemic, the hospitality sector has also been one of the fastest sectors to recover on the African continent. According to W Hospitality’s recent report, the number of deals(447 hotels) signed by hotel chains in 2021, and the number of rooms(80,291 rooms) added to their development pipeline is almost exactly the same as 2019.

Below we highlight some of our key Takeaways from the report.

North Africa is the hotspot for development

Overall, the total development pipeline by rooms is 1% higher in 2022 compared to 2021. However, by itself, Sub- Saharan Africa is trailing North Africa with a 6% decline in development. The region’s ‘power houses’ i.e Nigeria, Ethiopia, Kenya and South Africa have between them seen a 29% decline with Nigeria recording an even higher decline of 41%. 

On the other hand, North Africa has recorded the bulk of growth in the continent with Egypt emerging as the country with the highest number of rooms and hotels across the continent, three times the number of Morocco and almost four times the number of Nigeria. This has in part been buoyed by the government’s initiatives towards tourism.

City wise, Cairo has by far the largest pipeline (11% of the entire pipeline!), followed by Addis Ababa and Sharm El Sheikh, with Lagos, Nairobi, Algiers, Abuja and Dakar all at much the same level. While there are, potentially some large increases in supply, in cities such as Cairo, Nairobi and Abidjan, will be dependent on the completion of projects that continue to face strong headwinds, including delays in imported materials and the scarcity of funding.

Shifting dynamics

While the majority(74% of deals) of the upcoming developments are still located in city centers,  new deals for resort hotels are up considerably in 2021, now accounting for 20% of deals and 29% of rooms signed that year, compared to just 10% in 2020.Most of the new resort signings have been in the traditional tourist magnets of East and North Africa, but the Republic of Benin in West Africa has two new resorts coming, from Banyan Tree and Club Med, which will put this relatively new destination on the international map.

Interestingly, only 12 hotels out of the 447 in the pipeline are planned at airports across the entire continent despite the increase in airport renovations, expansions and new construction taking place in Africa.

 The Missing Middle

Across the continent, the midscale and economy segment remains largely underdeveloped posing opportunities for developers. However, focus continues to be on the branded hotels with the majority of the pipeline  still in the Upscale and Upper Upscale chain scales, with Luxury in third place. 

“Whilst the brands have  not been averse to expanding their Economy and Midscale footprint in Africa, they generally require multiple-site deals with an owner, not at all keen on single-site deals because of the central costs of supporting the brand. Finding developers with the resources – not just finance, but also sites with clean title – has proved elusive.” The report notes 

Hilton, Marriott hotel & Resorts and Radisson Blu are leading hotel brands ‘on-site construction activity

The report notes that generally, on site construction phase is good for the hotel chains, and for many others involved – a new hotel means jobs created, tax revenues for the government, enhanced business in the supply chain, more marketing spend for the destination, and so on.

At present, in terms of hotel brands, Hilton still has the highest number of rooms (2,904) on site construction, with Marriott Hotels & Resorts(2,788) and Radisson Blu(2,757) not very far behind.

When it comes to hotel chains, Marriott International, the world’s largest hotel chain, has the largest African development pipeline, more than double, Hyatt Hotels & Resorts, Meliá Hotels & Resorts and Louvre Hotels Group put together.

Still, delays remain in the sector, without about 30% of onsite construction expected to be delivered in 2026 or later.

Click here  to view the 2022 Hotel Chain Development Pipelines in Africa – By W Hospitality which provides consistent, reliable and comparable data on the development pipeline activity of the hotel chains who are operating in Africa, and those who are seeking to enter the continent for the first time.

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