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Hotel development in Africa soars

Africa Global Funds
April 11, 2016, midnight
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Word count: 474

Investors remain confident about the future of the hospitality industry in Africa, according to Trevor Ward, W Hospitality Group Managing Director.

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Investors remain confident about the future of the hospitality industry in Africa, according to Trevor Ward, W Hospitality Group Managing Director.

“Even when pummeled daily by low commodity prices, exchange rate problems, political challenges and poor infrastructure, Africa remains resilient,” he said.

According to new figures from the annual W Hospitality Group Hotel Chain Development Pipeline Survey, the number of planned hotel rooms in Africa has soared to 64,000 in 365 hotels, up almost 30% on the previous year.

The increase is largely down to strong growth in sub-Saharan Africa, which is up 42.1% on 2015 and is significantly outstripping North Africa which achieved only a modest 7.5% pipeline increase this year.

A major shake-up in the rankings by country saw Angola, never before listed among the top 10, push Egypt out of second place, due to a major deal there signed by AccorHotels.

In July last year, AccorHotels signed with AAA Activos LDA for the management of 50 hotels with around 6,200 rooms.

The 2016 survey provides a full picture of hotel development across the continent - 36 hotel chains and 86 brands with more than 64,000 rooms in 365 hotels.

In comparison to figures from the inaugural survey in 2009, it’s possible to see how far hotel development in Africa has come.

In 2009 there were 19 international and regional hotel chains contributing, with a pipeline of 144 hotels and just under 30,000 rooms.

Across the continent, the north-south divide on hotel development continues.

In 2011, the number of pipeline rooms in the five countries of North Africa was about 25% higher than that in sub-Saharan Africa, whereas today, it is less than half.

Ward said that there are two reasons why development activity in North Africa is now somewhat subdued.
“Firstly, the markets there are more mature and have already seen much development, so there are fewer opportunities for new hotels. Secondly, there is the political turmoil – in Libya, which has seen a 40% drop in the pipeline, and also Egypt, parts of which are experiencing drastic reductions in the number of tourists,” he explained.

Nigeria remains the country with the most rooms in the pipeline, up 20% on 2015.

Together with Angola, the two countries account for 17,782 rooms between them, almost 30% of the total pipeline and 40% of the signed rooms in sub-Saharan Africa.

Despite the promising 2016 survey findings, Ward cautioned on the number of hotel deals that have been signed but have so far not opened, for a variety of reasons but primarily a lack of finance.

“Between 2006 and 2013, 104 deals with 21,377 rooms, over 30% of the total, were signed and should now be open, or at least well under construction,” he said.

“If all those involved - the investors, chains, consultants and lenders - can bring these deals to fruition, the pipeline of the future will result in the much-needed expansion of Africa’s hotel industry,” he added.

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