New research from Lagos-based consultancy W Hospitality Group reveals a marked 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 per cent 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 cancelled.
The number of branded hotel rooms planned for SSA has risen consistently 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 per cent over the five-year period, and a compound annual growth rate of 13 per cent.
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 per cent 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 per cent 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 makes its debut with two hotels totalling 435 rooms between them. Liberia also has a planned hotel for the first time and Congo is 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; nevertheless; this is changing with two planned properties in DRC and one in 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.
The flip-side of the Sub-Saharan Africa growth story, however, is that less than 60 per cent of the rooms in the pipeline are under construction, compared to 75 per cent 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 per cent 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.
Trevor Ward, Managing Director, W Hospitality, said: The big story this year is a dramatic surge in interest from the hotel chains in Sub Saharan Africa. The continent generally has never been an easy place to do business, and is likely to remain more challenging than Europe, or even China. However, the lack of quality hotel rooms, not just in the capitals but also in the secondary cities is so marked that the major international chains now cannot ignore the opportunity."
Jonathan Worsley, Chairman, Bench Events, which organises the Africa Hotel Investment Forum (AHIF), which attracts all the major international hotel investors in Africa, where this report will be discussed in detail, added: "There are three trends we are observing in Africa, which act like a virtuous circle – cessation of conflict, economic growth and investor confidence – and at present, that virtuous circle has very positive momentum."
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 per cent of the branded supply.
Logos, product and company names mentioned are the property of their respective owners.