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Africa's booming hotel sector is expected to continue growing over the next five years

According to a recently published report, Africa's hotel industry has the potential to continue to grow over the next five years due to an increase in the number of both domestic and international visitors as well as the expansion of some hotel chains in the continent.

Africa's booming hotel sector is expected to continue growing over the next five years

A strong potential for growth in Africa’s hotel sector over the next five years has been identified by a PwC report titled Hotels Outlook: 2018 - 2020, in which a total of five African destinations have been found to be in the process of experiencing an accommodation boom. Namely, these are Kenya, Tanzania, Mauritius, South Africa and Nigeria, which have all been experiencing growth in its number of hotel rooms in recent years.

According to the report, the revenue for the five mentioned markets is expected to increase at a 7.4 percent compound annual rate and go from R35.2 billion in 2017 to R50.5 billion in 2020.

Speaking about the report’s findings, Pietro Calicchio, PwC Southern Africa’s Hospitality Industry Leader, revealed:

“Tourism to the African continent has proven to be resilient in the face of economic and political uncertainty, impacts of droughts and other regulatory changes. The opportunities are aplenty for this industry to enjoy further growth albeit at a more modest pace.”

Referring to Africa’s inherent exotic appeal and wildlife treasures in the mentioned destinations, the projected increase in hotel rooms are due to a number of increasing visitor numbers (both domestic and foreign) as well as the hotel industry’s untapped potential for business expansion in this region. In recent years, a number of hotel chains in the continent have picked up the pace in expanding its presence at all five main African destinations, the biggest tourism magnets.

In spite of the potential hotel growth representing good news for Africa’s tourism industry, Calicchio warned that any growth must be taken into context with the many challenges the continent faces:

“However, as we continue to see there are also a number of challenges facing each country. This is an industry that is reactive to the smallest change in political, regulatory, safety and sustainability matters.”

In the case of South Africa, one of the continent’s most stable nations politically and economically speaking, hotel room revenue is expected to grow by 5.6 percent annually and go from R16.6 billion in 2017 to R21.8 billion in 2022. South Africa is also expected to receive the largest number of new hotels with an additional 2,900 rooms to be added over the next five years and occupancy rates expected to grow and reach 62.5 percent in 2022. The number of international visitors to South Africa is expected to grow by 2.4 percent overall with the immediate outlook for 2018 being positive although with a somewhat lower percentage than registered in 2016. Concerning South Africa specifically the only setback is the:

“Continued debate on further relaxation of visa requirements for international visitors” as “this may impact on our forecast growth.”

Carlicchio added. Of all the African countries mentioned, Nigeria appears to be the fastest-growing market with the highests expected growth over the next five years, with a number of hotels scheduled to open in this period of time and a continued upward trending the domestic economy helping push for a faster growth in visitor numbers.

Mauritius, Kenya and Tanzania are the next fastest-growing markets with projected annual increases of 7.2 percent, 9.6 percent and 9.1 percent, respectively. Thus South Africa is expected to experience the slowest growth with an expected 5.6 percent compound annual increase in room revenue.

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