Hotel development has yet to take off in Africa, but the continent's slow pace of new hotel openings has been consistent.
During a recent webinar on 2024 hotel openings in Africa, Trevor Ward, principal of business advisory W Hospitality Group, said the fact that things move more slowly in Africa is not a bad thing for its hotel industry.
“It is not about pipeline, pipeline, pipeline. For my final check on Dec. 31 [of 2024 openings in Africa] — my idea of a good time on New Year’s Eve — the question I ask is not will a hotel open in the future, but can I book a room now?” he said, referring to his most recent report on the continent, “Hotel Chain Development Pipelines in Africa 2024.”
In terms of hotels opened as a percentage of those signed and starting development, Africa’s percentage opening in 2024 was 38%, just above its 2018 rate of 29% but far below its 75% rate in 2019. Between 2020 and 2023, the rate was never higher than 31% and reached a low of 21% in 2023.
Ward's conclusion is that hoteliers in Africa are made glum by the “anticipation of openings, not the actual openings.” But he added Africa needs more deals to get more hotel net unit growth.
“At the end of 2024, 15,820 hotels were in the pipeline in approximately 150 countries worldwide, and the simple math is that comes at about 100 deals per country. In Africa, it is 10 per country,” he added.
Of those Africa hotels in the pipeline at the end of 2023, 59 out of the total of 524 did open at a rate of 11%. Globally, of the 15,196 hotels in the pipeline at the end of 2023, only 1,978 opened, or 13%, he said.
Hotel brands in Africa
Throughout 2024 in Africa, there were 50 hotel chains and 145 brands active, an increase from the year before when those numbers were 47 and 134, respectively. Those firms and brands contain African entities as well as international ones, Ward said.
Of course, Africa's hotel pipeline also matters. It is an indication of desire, even if not every hotel opens. Ward said Africa now has an open and pipeline room count of 104,444 rooms, a 31% increase from 2021. Sub-Saharan Africa has approximately 53% of that number, with South Africa being the dominant player. Put in context, London as of September 2024, according to CoStar, has almost 146,000 hotel rooms in development.
Ward said Africa saw 9,600 new hotel rooms open in Africa in 2024, but that the continent’s rooms system network grew 13% year over year.
“For hotel stocks, it is all about net unit growth. One-third of Marriott’s signings in 2024 were conversions. Across the global industry, an estimated 40% of branded openings were acquisitions, and over half were conversions,” he said, underlining that growth of branded hotel rooms in Africa, where the average room count is 162.
The global hotel brands that were active in Africa, are generally evenly split between urban and resort properties. Twenty-one hotel brands, domestic and international, were active in openings in the continent in 2024, ranging from Marriott International opening 11 hotels to Jumeirah opening one hotel with seven rooms.
“Well, it’s one hotel. You have to book it in its entirety,” he said.
Radisson Hotel Group opened the most hotel rooms at 1,540 in eight hotels. Accor, TUI Hotels & Resorts and Hyatt Hotels Corp. also opened more than 1,000 rooms each across 15 hotels.
Among domestic African hotel brands, Egypt’s Jaz Hotel Group opened the most hotels, albeit only two.
Another W Hospitality statistic that puts things in clarity is that even if Africa almost reached five figures in terms of new rooms opening in 2024, in that year globally, Marriott opened more than 125,000 hotel rooms and Hilton opened more than 100,000.
“There are in Africa 13 countries without any global brand hotel openings whatsoever,” Ward said.
Morocco saw 10 hotels and 1,511 rooms open in 2024, with the next countries in the list in terms of hotel openings being Kenya and Tanzania with seven and 1,340 and 711 rooms, respectively,
Angola, Benin, Burkina Faso, Congo, Democratic Republic of Congo, Guinea, Namibia and Zambia all added to their branded hotel counts in 2024 by one, with a collective total of 1,287 rooms.
Ward said that while Egypt has 143 hotels in the pipeline, which accounts for 25% of the entire African hotel pipeline, only three hotels there opened in 2024.
This is indicative of longer timeframes, higher construction costs, political instability in some markets and frequent jitters around financing.
“The average time from signing to opening is 4.4 years. In Nigeria, I have calculated it to be seven years,” he said. “There are also no portfolio deals in Africa we can identify. The ones I can remember are mostly South African chains.”
Development challenges
Unfortunately some of the challenges to developing and opening hotels in Africa continue, with some becoming worse, Ward said. Such challenges include:
- Expensive and short-term funding.
- Suspension of United States Agency for International Development expenditure in Africa.
- Toxic politics in some countries.
- Wide fluctuations of currency putting difficulties on inbound investment.
- A poorer quality of sponsors and professional teams.
- Undue Russian influence in some nations.
Ward said some countries such as Sudan or Mali, until recently a favorite of adventurous travelers, have no hotels in their pipelines.
He referenced one hotel investor who immediately pulled out when the government of the country in question and Russia signed a development deal.
“I also have been working with one unbranded hotel looking for a global chain, and its [property-improvement plan] to secure [a brand] will cost more than it cost to build the hotel in the first place,” he said.
Regarding the suspension of the U.S. Agency for International Development program, Ward said Kenya was in line to lose $126 million of business, or 40% to 60% of the income for some hotels.
In the long term, Ward hopes Africa's hotel development will pick up. He added Africa and its 54 nations have so much in their favor.
“The rare minerals and the agricultural potential of the continent are mind-blowing,” Ward said.