Notable growth reported in the African and Middle Eastern hotel markets
STR Global's latest report for October 2015 indicates a notable year on year growth in the number of hotel rooms under contract and under construction in the Middle Eastern and popular African destinations. The growth in October is part of a wider trend of increased investment in the African continent's hotel market in the coming years on the back of more favourable investment conditions and increased demand.
Hotel research firm STR Global’s latest Global Construction Pipeline Report reveals a notable growth in the hotel market for Africa and Middle Eastern destinations in October 2015. The report’s findings indicate that holidaymakers will have a wider range of choices in the future when booking holidays in Africa and the Middle East. Year on year, the number of hotel room under contract, i.e. all confirmed projects that are currently in the planning phase, increased 29 per cent with 1975,705 rooms.
Similarly, there was also an increase in the number of rooms under construction with 105,177 rooms across 407 hotels representing a year-on-year increase of 43.1 per cent. STR’s report also indicated that many of these rooms, which are soon to enter the market, are of the Upper Upscale Scale segment. This segment accounted for the largest share of rooms in both the under contract and the under construction stages.
Echoing STR’s general sentiment was another report from consultancy firm JLL which stated that there would be over 42,000 new hotel rooms built on the African continent between 2014 and 2017. Additionally, according to JLL, projections indicate that there will be as much as $2.7 billion invested in the region’s hotel sector by 2018. Among the key driving factors for the bullish outlook is the more attractive investment climate in the region (in contrast with previous years), coupled with the fact that demand for holidays in Africa has grown. Notably, tourism in Africa is set to increase by 5.7 per cent by 2030, this compared to the mere 3.6 per cent growth projected globally.
The Head of property services at Hotel Partners Africa, David Harper stated,
" The investment market in Africa is improving along daily. More and more people [are] reviewing options more seriously than ever before… In eight countries growth averaged over 6% [in the last six years]… To set that in context, average hotel prices in Europe went up less than 1.5% per annum in the same period"
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