Hotel demand may not meet supply in Africa

Hyatt Regency Casablanca, one of three open and upcoming Hyatt properties in Morocco.

Encouraged by a more lenient visa regime in Africa that is driving visitor numbers, global hotel companies like Hyatt and Hilton are investing in new developments and conversions across the continent. But in Morocco, some insiders are raising concerns that demand will not meet supply.

Hyatt has announced plans to add another hotel to its estate in Morocco in early 2019. The 120-guestroom Park Hyatt Marrakech will be the third Hyatt-branded property in Morocco, and one of six the company is planning to open in Africa.

“With the introduction of a Pan-African, visa-free passport next year alongside the continued improvement in the connectivity and growth of the region’s airlines, we expect tourist and business travel will only continue to increase,” Peter Penev, VP acquisitions & development for Hyatt, said.

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The visa-free passport was launched by the African Union in July last year, granting visa-free access to all 54 member states. The Union aims to distribute them to all African citizens by 2020. The move was one of the factors behind Hilton’s recent decision to invest $50 million to add 100 hotels in the continent, due to open over the next five years.

Morocco continues to perform strongly, with STR reporting that August marked Morocco’s fifth consecutive month of ADR growth. At the market level, Marrakech recorded a 17.5-percent increase in RevPAR, driven solely by rate growth, while Casablanca was the only market that managed to increase both occupancy and ADR, resulting in 5.6 percent growth in RevPAR. STR analysts said that supply growth—up 3.5 percent year to date—was affecting Morocco’s occupancy levels.

According to the African Hotel Report 2017, Morocco was alone in North Africa to escape the worst of the Arab Spring fallout and terror alerts. With 75 hotels (branded hotels) and 13,522 bedrooms, across 17 different locations, the diversity of demand in various segments has been the very reason for hotel trading remaining strong.

Corporate interest in Rabat, Casablanca, Tangiers and Fez, with additional leisure demand in Marrakesh, the Atlas Mountains, Agadir and Essaouira have helped keep the hotel market away from the worst of the problems suffered by the rest of the region. There are 34 new hotel projects in the pipeline representing a 39 percent increase in current bedroom supply.

“I suspect that the ‘pipeline’ will remain just that until demand picks up,” David Harper, head of property services for Hotel Partners Africa, and the author of the African Hotel Report 2017, told HOTEL MANAGEMENT. “Moroccan developers have the enviable habit of not committing to new developments until the time is right, sometimes leaving promising development opportunities on hold for several years to try and avoid short-term over supply. The brands, as always, are keen to enter these potentially lucrative markets, but are pragmatic enough to know that a slight delay in entering, if it helps the owner, will be in their interest in the long run as well.”

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.

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