Hotel in development in Africa surges, led by sub-Saharan region

Is Africa be the next hotbed for hotel development? According to a recent survey conduced by W Hospitality Group, the continent is certainly poised for growth.

So say the the findings of the Lagos, Nigeria-based advisory group in its Hotel Chain Development Pipeline Survey, which shows a jump in the development pipeline to 270 hotels and nearly 50,000 rooms, with sub-Saharan Africa (SSA) exceeding North Africa by almost 70 percent.

The survey is based on data from 37 international hotel chains with 80 brands between them.

The data reveal a modest recovery in North Africa and stronger confidence in SSA. Consider that only two years ago, the number of rooms in the North African pipeline was the same as that in sub-Saharan Africa.

The SSA region has more national markets than North Africa, 49 countries compared to only five, and these have historically been underserved with branded hotels. But now they are catching up, according to the survey. Mauritania, for example, with no existing branded supply, now has three branded hotels in the development pipeline.

Meanwhile, growth in the pipeline in North Africa has slowed, impacted by unrest and political conflict. For example, Libya, a country which many groups were focusing on just two years ago, has seen no new hotel development deals. Then there is Egypt, traditionally a major growth market, but one that has lost some projects to delays and cancellations in 2014.

As a sub-region, West Africa has by far the greatest number of rooms in the pipeline, more than double East Africa, according to the report. This is largely due to Nigeria, which became the largest economy on the continent in 2014 after it rebased its GDP figures. It has the largest population and the largest number of urban conurbations in one country, with the exception of South Africa.

As in previous years, Southern Africa continues to lag behind, with fewer rooms in development this year than in Central Africa and with the highest number of countries with no activity at all – five, namely Botswana, Lesotho, Malawi, Swaziland and Zimbabwe.

Specific to individual countries, Nigeria has by far the most rooms in the chains’ development pipelines, over 8,500 rooms in 51 planned new hotels.  That is more than the entire pipeline in Central Africa and East Africa combined.

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In 2015, all the countries in the top 10 (with the exception of Algeria and Libya) saw an increase in their pipeline from the previous year. Kenya and Uganda saw the largest increases, at over 100 percent and 90 percent respectively. Despite the continued difficulties that the country has faced, Egypt recorded a substantial 37 per cent increase in its pipeline, indicative of returning confidence.

Egypt also has the highest performing pipeline in Africa, with almost 5,500 rooms under construction, compared to 3,400 in Nigeria. 

Global Brands
No doubt global hotel brands and companies have their eyes on Africa as a growth pocket. Consider last year's acquisition of the Protea Hospitality Group by Marriott International, a deal that made Marriott the largest hotel company in Africa. Marriott's new Protea portfolio consists of 10,148 rooms in seven African countries including South Africa.

“With the addition of Protea’s local knowledge and infrastructure, we’re well positioned to continue growing in one of the fastest expanding economic markets in the world,” said Alex Kyriakidis, president and managing director of Marriott’s Middle East & Africa region.

Added Marriott CEO Arne Sorenson, "“The Middle East and Africa region offers a tremendous opportunity for Marriott International,” said Sorenson. “The region will play a large part in helping us achieve both our short-term and long-term targets."

Munich-based Kempinski Hotels is also focused on Africa, but the growth strategy is to expand property by property. The latest addition to the portfolio, the 269-room Kempinski Hotel Gold Coast City, is scheduled to open in Accra, Ghana, later this year.

“The investor profile behind much of Africa’s recent development has been a combination of local, regional and international investors. Although coming off a small base, we have seen a number of private investors in the region putting up funding for hotel projects,” said Mmatsatsi Ramawela, chairperson of the Hotel Investment Conference Africa and CEO of the Tourism Business Council of South Africa.