Investment in new hotels in Africa is booming and is expected to total $2.1 billion (R28.9bn) this year and increase to $2.4bn next year and in 2017, according to a forecast by services and investment management firm Jones Lang LaSalle (JLL).
This investment is in the development of new hotels only, with the major portion in sub-Saharan Africa. JLL is forecasting 1.5 percent annual supply growth in north Africa and an average annual supply growth of 3.5 percent in sub-Saharan Africa.
Xander Nijnens, the senior vice-president for sub-Saharan Africa for JLL Hotels & Hospitality Group, said in the long term there was little doubt Africa would be a meaningful player in the global real estate economy and pioneers and with Africa specific development and transaction expertise were well placed to reap the benefit of an early entry.
“The next several years will see a significant evolution in the hotel real estate landscape in Africa and we anticipate that global capital will flow into the sector as and when the right opportunities arise,” he said.
Pipeline
Data from the latest hotel chain development pipeline survey produced by W Hospitality Group released earlier this year revealed the development pipeline for hotels in Africa, in line with increasing confidence in sub-Saharan Africa, had grown by 25 percent to 270 hotels from 215 hotels last year.
JLL estimated international brand penetration in Africa at 22 percent but indicated it was set to grow significantly.
This was reflected in announcements this week by major international hotel groups at the African Hotel Investment Forum in Ethiopia.
Carlson Rezidor announced the first Radisson Blu residence in Nairobi in Kenya, its third project in Nairobi and the group’s fifth Radisson Blu residence in Africa. Carlson Rezidor’s total portfolio in 27 countries in Africa now comprises 65 hotels, with 30 hotels with 6 700 rooms in operation and 35 hotels with 7 600 rooms under development.
Marriott International, in partnership with Sunshine Business, announced its first Marriott executive apartments in Addis Ababa in Ethiopia.
It currently has four properties in north Africa with more than 2 000 rooms but by 2020 expects to open a further 12 properties to raise the room count by almost 3 000 rooms.
Alex Kyriakidis, the president and managing director of Marriott International Middle East and Africa, said Africa was important to the group because of its rapid economic growth, growing middle class and youth population and the expansion of international flights to the continent.
“With over 850 million people in sub-Saharan Africa, there are enormous opportunities there,” he said.
Starwood Hotels & Resorts Worldwide, which has a footprint of 34 operating hotels and a pipeline of 20 hotels currently under development in Africa, announced seven new deals – two in Nigeria and one each in Egypt, Mali, Kenya, Senegal and Tanzania – and said it would grow its portfolio in Africa and the Indian Ocean by more than 50 percent over the next five years.
Michael Wale, the president for Starwood, Europe, Africa and Middle East, said the momentum of growth they were seeing in Africa today was unprecedented.
JLL said tourist numbers were projected to increase by 5.7 percent a year in Africa compared to 3.2 percent globally up to 2030 and hotel demand to increase at a rate of 5 percent a year between this year and 2017.
“Increased tourist arrivals to Africa are coming off a very low base, with only a 4.9 percent share of all global arrivals, and this should signal a massive potential for future growth.
“This is a promising outlook for international guest demand,” JLL said.