Hotels in these North African cities are topping STR's charts

Mandarin Oriental, Marrakech, Morocco Image: Mandarin Oriental (Hotels in the Middle East reported negative performance results in the second quarter of 2018 while hotels in Africa posted growth across the three key performance metrics.)

Marrakech, Morocco, has emerged as a standout performer in Africa’s hotel sector, according to STR’s H1 2018 figures.

In the first half of the year, Marrakech’s ADR increased 40.7 percent to $195, while recording a 12.3-percent increase in occupancy at the same time. Marrakech also saw a 58.0 percent RevPAR increase to $124.

“Due to its proximity to markets where security concerns have hindered tourism business, Morocco’s hotel performance has suffered in recent years,” said Thomas Emanuel, business development director for STR, in a statement. “As consumer confidence is returning to several of these markets, Morocco’s leisure capital, Marrakech, has seen an increase in demand and hotel operators have managed to capitalize by driving rate growth.”

Another key African destination seeing notable growth is the Cairo and Giza market. In the first half of the year, occupancy increased 10.1 percent while ADR went up 9.6 percent to $93.   

Ups & Downs

Other African cities aren’t faring as well. In Cape Town, South Africa, occupancy dropped 10.8 percent compared with H1 2017. With the appreciation of the South African rand against the U.S. dollar, the market recorded a 3.0 percent decline in ADR in local currency, but a 5.4 percent increase when looked at in U.S. dollars, reaching $151. (A different study from earlier this month found that hotel room values in the Cape Town province increased by 25 percent in 2017.)    

Occupancy and rates have also fallen in Nairobi and Dar Es Salaam. In Nairobi, occupancy dropped 0.6 percent while ADR fell 6.5 percent in U.S. dollars. Dar Es Salaam saw a sharper occupancy decline (-2.1 percent), but a less-severe rate decline (-2.7 percent). Both markets recorded actual occupancy levels below 50 percent for the first half of the year, with Nairobi operating at 49.3 percent and Dar Es Salaam at 47.6 percent.

Recent increases in demand have driven occupancy growth as well as rate growth in local currencies for both Lagos and Addis Ababa, but looking in U.S. dollars the scenario is less positive. Lagos’ occupancy was up 10.3 percent, but its ADR dropped 7.6 percent in U.S. dollars. Meanwhile, Addis Ababa saw a 7.3-percent increase in occupancy, but an 11.6-percent decline in ADR in U.S. dollars.