Hotel development pipeline in Sub-Saharan Africa

New research from Lagos-based consultancy W Hospitality Group has revealed a significant divergence in activity when it comes to hotel development in Africa. For the first time since the survey began in 2009, the international and regional hotel chains are signing more deals in sub-Saharan Africa (SSA) than in North Africa, as the chart below shows.

The 49 countries of SSA now have a development pipeline that is over 40 percent greater than the five countries in North Africa, in double the number of hotels. By contrast, North Africa, which has experienced negative growth in 2014, continues to be negatively impacted by the unrest in many markets in the region, particularly Egypt, where projects have either been suspended or canceled.

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The number of branded hotel rooms planned for SSA has risen since 2011 (from 13,700 in 2011 to 23,283 rooms in 2014) and the number of hotel deals signed has also increased sharply, from 77 hotels in 2010 to 142 hotels in 2014. This represents growth of 84 percent over the five-year period, and a compound annual growth rate of 13 percent.

Country by Country

Out of the 38 countries surveyed, Nigeria ranks highest both in terms of the number of hotels and the number of rooms in the pipeline, which is almost 40 percent larger than the second-ranked country, Morocco.

Of the five North African countries, Libya is the top performer in terms of growth, despite the ongoing unrest there, adding three hotels to its 2014 pipeline, an addition of 869 rooms, up 62 percent on 2013. However, a few large developments skew the picture, as Libya and Egypt have some much larger properties planned, close to double the size of those in Nigeria and Morocco.

Nine countries are new to this year’s pipeline report. South Sudan has two hotels (with 435 rooms between them); Liberia also has a planned hotel for the first time and Congo is set to have two new branded hotels, the first development in the past three years. Equatorial Guinea and the Democratic Republic of Congo (DRC) have not seen any pipeline action in the past three years; but two properties are planned for DRC and one for Equatorial Guinea. There is also newly sparked interest in Cote d’Ivoire as a result of the return to political stability, after many years of civil war, which is encouraging economic growth.

Construction

The flip-side of the Sub-Saharan Africa growth story, however, is that less than 60 percent of the rooms in the pipeline are under construction, compared to 75 percent in North Africa. The table below shows the top 10 countries ranked by the number of rooms ‘on site’. On this analysis, Nigeria loses its first position in the previous ranking by number of planned rooms and moves to fourth place – with only 37 percent of signed rooms under construction. This reflects both the pace of the growth in the pipeline, as well as the slow pace of getting projects started in that country. Ethiopia and Senegal lose their positions in the top 10 to Cote d’Ivoire and Rwanda, who have more projects actively on site than the former two.

This year’s survey is based on the contributions from 27 hotel chains with 60 brands between them. Of these 27 hotel chains, 24 of them are already operating in Africa, with a total of approximately 84,000 rooms. The pipeline of new deals therefore represents almost 50 percent of the branded supply.

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