Hotel investment in Africa heats up as tourism demand rises

Four Seasons The Westcliff Johannesburg, Africa

Africa has increasingly become the focus region for numerous hotel investors as the continent quickly becomes known as a high-demand destination for tourists. According to IOL, TopHotelProjects' data showed that 116 hotel projects are in the planning phase and 155 projects are under construction while 36 projects are in the pre-opening phase and 42 projects are almost complete. 

Michele de Witt, director of hotel development, management and advising firm Horwath HTL South Africa, believes that the continent's uniqueness has attracted investment. She explained that Africa is still an untapped market in travel and tourism investment. The World Travel and Tourism Council reported that sub-Saharan Africa only attracted about $17 billion (2 percent) of the approximately $807 billion of investment in travel and tourism worldwide last year. “While some investors might consider investment in Africa risky, many investors are attracted by first mover advantage and the higher returns,” she said. 

De Witt discussed that investment in Africa has many benefits, including job creation, a source of foreign exchange into an economy, a drive to enhance infrastructure and consumption of local products.

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However, she said that the industry needs an enabling environment in order to grow and develop. “One of the biggest challenges for the hotel industry in Africa remains access into destinations; in particular air access. While air access has improved in the past decade, it can still take travelers from within the continent almost an entire day to travel to another country in Africa. “In today’s fast-paced environment, this is not ideal. Nevertheless, it would appear many governments across the continent now understand the role travel and tourism can play in the economy and have set about to establish policy that contributes to a more favorable trading environment,” De Witt said.