RESEARCH HOTELS AFRICA 2018 Accommodating growth in Africa HOTELS AFRICA 2018 RESEARCH AFRICA HOTELS: HOTEL MARKET OVERVIEW ROOMS FOR GROWTH Hotel supply levels vary greatly across Africa. The growth potential of Africa is increasingly The distribution of Africa’s current Elsewhere in Africa, the tourist islands of Hotel development hotspots in East AFRICA IN 2030 recognised by international hotel operators, investors supply of branded and chain hotels is Mauritius, the Seychelles and Zanzibar all Africa include the major cities of Kenya, illustrated by the hotel density map on have a significant presence of branded Ethiopia and Tanzania. POPULATION GROWTH and developers. pages 4-5. The current hotel stock is hotels and resorts. In contrast, some of Although it is a comparatively well- By 2030, Africa’s population heavily concentrated in a small number Africa’s largest cities, including Kinshasa, will increase by 36% to supplied region, North Africa continues Global and local hotel chains have Africa’s population is growing at a faster of markets. South Africa has the Khartoum and Addis Ababa, have only a to see new development, accounting billion targeted Africa as a growth region, rate than that of any other global region; largest supply, with almost 30% of the handful of international branded hotels. 1.7 for around 29% of pipeline projects. due to both its relative undersupply it is currently home to around 1.2 billion continent’s chain hotels. The largest Across Africa, more than half of the continent’s capital cities have fewer than This stems from the expansion of major of international-quality hotels, and the people, but UN projections suggest hotel markets in South Africa URBANISATION five chain hotels each. multinational chains, and from Middle expectation of increased demand for that this figure will more than double are Johannesburg and Cape Town, but By 2030, Africa’s urban Eastern hotel developers and chains by 2050 and that it will pass 4 billion by population will rise by 63% rooms. Underpinning this are Africa’s 40m chain hotels are spread widely across The distribution of pipeline projects varies 40m entering North Africa. to million long-term economic and demographic the end of the century. Growth will be the country, due in large part to the significantly compared with the existing 770 growth prospects, which have continued increasingly concentrated in the large extensive hotel networks of local brands supply, reflecting the increased focus of Across the continent, development cities of Sub-Saharan Africa, with the to attract hotel groups’ interest despite such as Protea Hotels, Tsogo Sun and international chains on markets currently activity is being driven primarily by populations of cities such as Luanda, CITY GROWTH a slowdown in overall African economic City Lodge. perceived as being undersupplied. the expansion plans of the larger Africa will have 15 cities 40m Lagos, Dar es Salaam, Nairobi and Addis with populations over growth in recent years. 40m Most strikingly, 35% of projects under multinational hotel groups. All of the Ababa forecast to grow by more than Outside of South Africa, the largest development in the continent are in major global players have multiple hotels 5 million Pan-African GDP growth dropped to 80% during the 2015-2030 period. concentration of chain hotels is in West Africa, which is home to only under development across Africa, and in 2030, compared with 2.1% in 2016, its lowest level in more the North African countries of Egypt, 7 cities today 9% of the current supply. The greatest 40m Africa’s fast-growing, economically several of them have made eye-catching than two decades,40m primarily40m due to the Morocco and Tunisia. Resort locations m 40m 40m 40m developing cities will need increased concentration of these projects is announcements about their future 40m 40m 40m 40m 40 impact of lower commodity prices on such as Sharm El Sheikh, Hurghada numbers of hotel rooms to in Nigeria, primarily in Lagos and African plans. Hilton, for example, ECONOMIC GROWTH its major oil-dependent economies. and Marrakesh are among the biggest Africa’s economy will be accommodate both business travellers Abuja, where multiple hotels are under launched its US$50 million Africa Growth However, growth is estimated by the markets in these countries, but worth US$3.8 trillion and rising tourist demand. Over the long development for international brands in 2030, more than international hotel chains also have a Initiative in late 2017, with the aim of Tanzania Kenya Nigeria Mauritius Uganda Namibia Côte d'Ivoire Botswana Mozambique Zimbabwe Egypt Tunisia South Africa Morocco International MonetaryAlgeria Fund to have term, the UN World Tourist Organization including Hilton, Sheraton and Marriott. reasonably large presence in commercial adding 100 African properties to its %bigger than today recovered to approximately 3.5% in forecasts that international tourist 60 cities such as Cairo and Casablanca, The East Africa region also accounts for a portfolio over the next five years. The 2017. The large oil-driven economies of numbers in Africa will grow at one of the where demand is driven by business significant share of pipeline projects, with activities of other major hotel groups are Nigeria and Angola are gradually moving fastest rates globally. Africa received TOURISM GROWTH travellers in addition to tourism. 26% of the projects under development. outlined on pages 6-7. Annual international tourist out of recession, while growth rates 57 million international tourist arrivals arrivals will more than double have remained resilient in less resource- in 2016, but the UNWTO projects that by 2030 to reach dependent countries such as Kenya, this will reach 134 million by 2030. At Ethiopia, Tanzania, Côte d’Ivoire and present, Morocco is the top destination FIGURE 2 134million Number of chain and branded hotels – top ten countries in Africa Senegal. These countries are forecast to with over 10 million arrivals, but future Source: UN Population Division, USDA Economic maintain annual GDP growth in the 5-8% growth is forecast to be strongest in the Research Service, UN World Tourism Organization range over the next five years. East, West and Central regions of Africa. m FIGURE 1 10.0m 10.3 Annual international tourist arrivals (millions) – top ten countries in Africa 5.3m 5.7m 2.2m 1.3m 1.4m 1.5m 1.6m 1.7m Mozambique Côte d'Ivoire South Africa Zimbabwe Botswana Morocco Namibia 68 Tunisia Algeria Egypt 60 58 46 31 28 430 300 153 103 SOUTH AFRICA EGYPT MOROCCO TUNISIA KENYA MAURITIUS NIGERIA TANZANIA ZIMBABWE ALGERIA Source: United Nations World Tourism Organization. 2015 or 2016 data, depending on availability Source: Knight Frank Research. Hotel numbers exclude lodges, safari camps, chalets and cruise-hotels. Data as at December 2017. 2 3 Morocco - 10.3; South Africa - 10.0; Tunisia - 5.7; Egypt - 5.3; Zimbabwe - 2.2; Algeria - 1.7 Mozambique - 1.6; Botswana - 1.5; Côte d'Ivoire - 1.4; Namibia - 1.4; Uganda - 1.3; Mauritius - 1.3; Nigeria - 1.3; Kenya - 1.1; Tanzania - 1.1 430 300 153 103 68 60 58 46 31 28 25 23 21 19 18 18 16 14 10 10 9 9 8 HOTELS AFRICA 2018 RESEARCH HAMMAMET SOUSSE In addition to the well-known international CASABLANCA TUNISIA hotel operators, several brands operating AFRICA HOTEL DJERBA solely in Africa are actively growing their MOROCCO businesses. These include CityBlue, a DENSITY MAP chain owned by UAE investor Diar Capital, AGADIR which has opened hotels in four East CAIRO MARRAKESH African countries and has signed pipeline ALGERIA LIBYA SHARM EL SHEIKH deals in a further eight countries in East HURGHADA and West Africa. Mangalis Hotel Group, a subsidiary of Teyliom International, has MARSA ALAM opened three hotels in West Africa and has EGYPT ten pipeline projects in this region. Azalaï Hotels Group has grown from its homeland of Mali to have projects opened or under MAURITANIA construction in most major West African CABO MALI capital cities. VERDE SUDAN NIGER ERITREA Other groups that are growing in prominence in Africa include Germany’s SENEGAL Deutsche Hospitality, Spain’s Meliá Hotels THE GAMBIA CHAD BURKINA International and Switzerland’s Mövenpick DJIBOUTI GUINEA GUINEA FASO Hotels & Resorts. Asian hotel operators BISSAU NIGERIA with projects under development in Africa SOMALIA include Thailand’s Dusit International CÔTE GHANA SIERRA D’IVOIRE SOUTH ETHIOPIA and Minor Hotels Group. Middle Eastern LEONE CENTRAL AFRICAN SUDAN REPUBLIC groups active in the region include Rotana KEY LIBERIA and Emaar Hospitality, which has projects Number of branded BENIN CAMEROON and chain hotels ACCRA LAGOS in Egypt under its Address brand. TOGO EQUATORIAL GUINEA UGANDA Most international hotel groups have REPUBLIC KENYA asset-light business models in Africa OF THE GABON CONGO whereby they usually operate, but do not 1 100+ SÃO TOMÉ & DEMOCRATIC NAIROBI own, their branded hotels. This creates PRINCIPE REPUBLIC RWANDA Hotel Hotspots OF THE CONGO opportunities for developers and investors BURUNDI to either build or acquire properties operated by the major chains. Long TANZANIA ZANZIBAR SEYCHELLES construction times can be a significant DAR ES SALAAM challenge to brands seeking to grow their African portfolios. To circumvent this, some groups are pursuing growth strategies that COMOROS prioritise the rebranding of existing hotels, FIGURE 3 FIGURE 4 ANGOLA rather than the development of new hotels. Distribution of chain and branded Distribution of hotel development MALAWI As is the case in the rest of the world, hotels in Africa projects in Africa ZAMBIA the growth of the Airbnb market has CENTRALCENTRAL CENTRALCENTRAL AFRICA AFRICA presented a disruptive challenge to AFRICA AFRICA traditional hotel operators in Africa. While 2% 4% 2% 4% ZIMBABWE still a very small part of its global presence, 9% MAURITIUS Airbnb says that it now has 100,000 WEST NORTH MOZAMBIQUE AFRICA NORTH % listings in Africa, accommodating 1.2 AFRICA AFRICAAFRICA 29% BOTSWANA million guests in the last year.