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Hospitality Projects Update: Africa

Despite the global havoc, brought about by the deadly virus spreading its claws in all destinations, African hospitality pipeline seems to remain as robust to negative shocks as ever! With almost 300 new hotels and 62,137 rooms across the continent, investors and operators exhibit a fair amount of faith in the long-term development of the market, perhaps, counting on the relatively fast recovery from the demand side, once the state-imposed regulations are loosened to more travel-friendly standards.

The numbers

2020 cannot stop surprising us: 70 more properties are scheduled to open their doors throughout Africa till the end of the year, which might come as a surprise to those of us dreading the currently ubiquitous single-digit occupancy levels and the consequences of quite a rich supply influx. However, the newly entering 13,000 – odd rooms do not have to spell doom for the existent players, should they be versatile enough to adapt to the current circumstances and willing to explore the previously untapped markets with creative diversification strategies.

Looking further into the future, other 78 projects are bound to start welcoming guests in 2021, followed by 55, 23 and 53 signings in 2022, 2023 and 2024+ respectively. Out of the whooping 279 planned hotels, about a half are positioned as luxurious properties, highlighting the international chains’ interest in the progressive development of the continent’s perception as an upscale travel destination. Despite this, given the positive intra-continental dynamics, increasing disposable income and the likely faster resurgence of business travel in the post-covid world, budget and four-star sector may be better positioned for gains, should it secure the necessary funding.

The destinations

As to the country-level analysis, Egypt – an already established market – keeps leading the way with 17,351 rooms in pipeline, followed by Morocco and Nigeria with 34 and 25 hotels respectively. Ethiopia, Kenya and South Africa are also in the top performers, despite the current absorption struggles and unclear economic perspectives in the latter country.

When it comes to the urban markets, once again, Cairo is at the top of the class with 4,621 rooms in development. Ethiopian and Kenyan capitals follow with 12 projects both, while Abidjan (Côte d’Ivoire) and Abuja (Nigeria) are slightly behind with nine and eight hotels respectively.

The brands

With its ambitious Africa expansion strategy, Radisson Hotel Group is turning its plans into reality with 38 openings in the coming years, out of which 19 properties are positioned as Radisson Blu hotels, ten as Radisson and the remaining nine as Park Inn. Hilton Worldwide is following up with 26 projects and a total of 5,187 keys signed in the signature Hilton brand. Accor and Marriott International also continue establishing their presence on the continent with 26 and 17 properties respectively.

Regardless of how exactly the markets will absorb this supply in the “new normal” order, the sheer number of projects under development instills optimism, as it signals the long-term perception of Africa as a fruitful region when it comes to hospitality. We hope, such perception will not be much different for the short-term perspective either.

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