Report: Africa attracts global brands, but most money is local

Africa's hotel sector is expecting an investment increase of $2.7 billion by 2018, according to a recent report from consultancy firm JLL, and more than 42,000 new hotel rooms are expected to be built across the continent between 2014 and 2017. Sub-Saharan Africa expects an average growth of 9,000 new rooms per year, with supply expected to grow to 4 percent annually by 2017. This compares to a relative slow-down in the north, where 5,000 new rooms are anticipated between 2015 and 2017.

"The investment market in Africa is improving almost daily," David Harper, head of property services at Hotel Partners Africa, told CNN recently, noting that eight countries have seen growth of more than 6 percent in the last six years. "To set that in context, average hotel prices in Europe went up less than 1.5 percent per annum in the same period," he said.

One factor behind the surge in demand is a resurgent tourism industry, expected to increase 5.7 percent yearly between now and 2030, significantly higher than the 3.6 percent anticipated globally. This, and more diversified economies, is attracting global hotel brands, whose presence accounts for 22 percent of total rooms. Such hotels are mostly operated via franchises and management contracts with very few leases, according to JLL.


Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

But, the site notes, approximately 75 percent of investment in hotel real estate in Africa currently comes from local and regional sources, among them sovereign wealth groups, particularly in the northern region.

Suggested Articles

Following its purchase of Seiler & Partenaires Holding SA, Aevis Victoria has bought eight Swiss hotels, including the InterContinental in Davos.

Ground rent or ground lease deals have been moving into the mainstream with great effect at companies such as PPHE Hotel Group.

Growing interest in the lodging sector from institutional investors looking for steady returns has spurred an increase in ground-rent deals.