The hospitality market in Nigeria will experience a compound annual increase of 5.4 percent in the next five years; supported by investment growth in infrastructural expansion, the PricewaterhouseCooper (PwC) Hotel Outlook for 2018-2022 has projected.
Available hotel rooms across the country has been estimated to rise to 12,600 in 2022, from 9,700 in 2017, a growth ranked the largest expansion of any country in the report.
The outlook, having studied hotel business trend in five African markets including South Africa, Nigeria, Mauritius, Kenya and Tanzania, projects that hotel room revenue for the markets will increase at a 7.4 percent compound annual rate to N1.3 trillion in 2022 from N941 billion in 2017.
Considering the improvements in local economy, Nigeria is expected to be on accelerated growth pedestal for the forecast period, with additional hotels spurring higher patronage.
According to Pietro Calicchio, hospitality industry leader, PwC Southern Africa, tourism on the African continent has proven to be resilient in the face of economic and political uncertainties, impacts of droughts and other regulatory changes.
“The opportunities are aplenty for this industry to enjoy further growth albeit at a more modest pace. 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,” he said.
Meanwhile South African hotel room revenue is expected to hit R21.8 billion in 2022, up 5.6 percent, compounded annually, from R16.6 billion in 2017, with an additional 2 900 rooms to come up over the next five years.
The report also forecasts occupancy rates to continue to grow; reaching 62.5 percent in 2022 while international visits to South Africa will continue to grow with a 2.4 percent increase overall.
The outlook for 2018 remains positive albeit at lower percentages than experienced in 2016. The report projects that the number of foreign visitors and domestic tourism will increase by 5.3 percent in 2018.
The total number of travellers in South Africa is expected to reach 19.5 million by 2022, a 4 percent compound annual increase from 16 million in 2017.
After jumping 38 percent in 2016, visitors from China to South Africa fell 17 percent in 2017. Travellers from India rose a modest 2.7 percent in 2017, well below the 21.7 percent increase recorded in 2016.
Of non-African countries, the UK remains the largest source of visitors to South Africa at 447 901 in 2017, contributing to the overall growth of 7.2 percent in visitors from non-African countries in 2017. Meanwhile, the largest number of African visitors came from Zimbabwe at 2 million, followed by Lesotho at 1.8 million and Mozambique at 1.3 million.
Overall, hotel room revenue in South Africa rose 4.6 percent to R16.6 billion in 2017. Five-star hotels had the highest occupancy rates in the market in 2017, at 79.5 percent. While the average daily rate (ADR) growth for five-star hotels slowed in 2017 to R2,6 million, as it did for the market as a whole, the 8.8 percent increase was still well above the increase for three- and four-star hotels, reflecting the impact of the high occupancy rate for five-star hotels.
With a number of four-star hotels opening in 2017, available rooms increased 1.8 percent, the first rise since 2013. Most of the hotel openings scheduled for the coming years will be four-star hotels, leading to a projected 2.4 percent compound annual increase in available four-star rooms over the next five years, 76 percent of the total increase in available rooms for all hotels in South Africa. Three-star hotels accounted for 31 percent of total hotel room revenue in 2017.
Hotel room revenue in Mauritius increased by 12.7 percent in 2017 as the country continues to experience growth in the number of foreign visitors. Hotel room revenue is projected to grow at a 7.2 percent compound annual rate to 2022.
Kenya experienced a drop in visitors following the national elections in August 2017 but recovery was already seen in December with an increase in visitor numbers resulting in 9.9 percent overall growth. However, this was not enough to boost overall room revenue, which showed a 13.5 percent decline in 2017. Going forward, tourism in Kenya is expected to increase at a 6.9 percent compound annual rate, rising to 2.06 million in 2022 from 1.47 million in 2017.
Tanzania’s hotel room revenue amounted to $206 million in 2017, a decline of 5.5 percent over 2016 due to a drop in guest nights. However, we expect guest nights to grow in 2018 and forecast revenue growth of 10.2 percent for 2018.
The report noted that the hotels and tourism sectors across the monitored countries indicate signs of continued growth over the forecast period. It said although tourism remains an important part of each economy, the slightest change can have a fundamental impact on the future growth of each market.
Frontpage January 22, 2018
Frontpage December 12, 2018