REPORT FROM CAMEROON—Cameroon has enjoyed political stability since its independence in 1960, made the transition to multi-party democracy in 1990 and has seen its current president, Paul Biya, in power since 1982.
Since the first Boko Haram attack on Cameroonian soil in 2014, acts of violence on the northern territory have intensified. Spreading insecurity has weakened political stability by reviving animosity between the country’s northern and southern regions. Security also remains volatile along the border regions with the Central African Republic.
On the Gulf of Guinea, Cameroon is endowed with rich natural resources, including minerals and oil, of which it remains a small producer, despite oil representing almost 40% of its total exports (oil rents accounted for 5.5% of gross domestic product in 2013, but this percentage is rising, according to the World Bank).
Despite a challenging business environment (as pointed out by low indices in regard to doing business), the country has registered steady economic growth. 2014 witnessed a slowdown, following the drop in oil prices.
Based on International Monetary Fund forecasts, the country should reach 5%-plus growth within the next few years, boosted by large infrastructure projects such as a deep-water port in Kribi, a dam in Lom Pangar, and hydrocarbon and mining projects.
Air access
Cameroon is a natural hub for Central Africa due to its strategic location between the region’s landlocked countries and those on the coast.
Transport infrastructures remain limited, however, and are an impediment to growth.
Cameroon has three international airports—in Douala, Yaounde and Garoua. Douala remains the main entry point with 745,000 passengers in 2013 (+8% versus 2012).
Tourism
The country benefits from natural assets (forests and wildlife) and diverse landscapes and cultures. Its image, however, has been affected by security issues.
Thus, despite significant potential, leisure tourism remains limited and concentrated on seaside tourism, namely in the Kribi area, Cameroon’s main tourism destination.
Hotel development and trends
The hotel supply in Cameroon remains poorly developed. It mainly is concentrated in Douala, the economic capital, and, second to that, in capital city Yaounde.
Douala is the first city in the Central African Economic and Monetary Community zone in terms of population and commercial impact. As Cameroon’s largest port and major economic center, it has more than 25% of the hotel supply.
International branded supply remains limited, represented by two AccorHotels assets (300 rooms) under the Ibis and Pullman flags. Pullman entered the market earlier this year, with the takeover of the former Meridien Hotel, and should be renovated by the end of 2016.
Douala’s market hasn’t seen any significant change over the last year and is a relatively stable market supported by its economic activity. In 2014, average occupancy reached approximately 64%, on par with 2013, according to Horwath research. So far security issues in the northern region have had a limited impact on the hotel performances. Average daily rates are estimated as follows :
- Upscale: $140-$150
- Midscale: $90-$105
- Economy: $70
Yaounde is the second largest hotels market, with 17% of national supply, according to Horwath’s research.
Yaounde’s supply is made up of large independent hotels, among which are two former AccorHotels properties and one single branded hotel, the 5-star Hilton which benefits from a leading position.
Besides a handful of new independent hotels, the market has not undergone any major structural changes over the last five years. Mainly driven by government, international organizations and non-government organizations, the market benefits from stable fundamentals but remains narrow with limited prospects for growth in the mid-term. Its occupancy remains lower than that of Douala, reaching an estimated average of 55% in 2014.
Hotel demand originates predominantly from national and African travelers. As observed in most of the sub-Saharan Africa’s metropolises, demand is driven by business clients. Meetings, incentives, conventions and expositions demand represents a significant share in both cities.
In addition, coastal cities such as Kribi and Limbe are leisure destinations and secondary hotel markets.
Near future
Following an upward trend in demand, the hotel supply is expected to expand.
Based on TopHotels data and Horwath HTL intelligence, 400 to 500 rooms could open in Douala before 2019 in the 3-star and 4-star segment, including a second Ibis property. At this stage, a significant share is expected to be run independently. Global brand companies such as Hilton Worldwide Holdings and Marriott International are considering the market.
Cameroon is to host the Africa Cup of Nations in 2019. This should generate a surge in hotel projects prior to the event.
Overall, hotel investors have adopted a wait-and-see approach. Major infrastructure projects should have positive impacts on the economy. However, persisting challenges affecting the business climate have been hindering investments.
Perspectives
Internal tensions in the ruling party are deepening ahead of the presidential and legislative elections scheduled in 2018. President Biya’s health has been a concern, and there are associated uncertainties over his succession or willingness to run for a sixth term in office.
Diminishing, low oil prices and the maturing of current reserves might present an unfavorable long-term outlook. In this perspective, the quest for reserves and further diversification of the economy will be the determinant in attracting foreign investors.
Business travel concentrates on Douala, as the main economic center, and Yaounde, as the administrative center. Horwath holds the opinion that Cameroon has a potential for hotel development in both of these cities. For brands, a dual location could stand as an opportunity. However, Douala’s market remains stronger and more structured than that of Yaounde and represents a better bet.
Beatrice Montagnier worked as a consultant in the tourism & leisure consulting industry for 5 years before joining Horwath HTL in 2006. She specialized in market and programming studies and hotel strategies, especially for urban or resort projects. Based in Dakar, she is in charge of Horwath HTL Office in Senegal. Her international experience includes the Maghreb region, the Mediterranean region and Sub- Saharan Africa.
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