*To grow revenue 14.6% annually in next five years….
Nigeria’s hospitality business is expected to be the fastest-growing market in Africa from a revenue perspective over the next five years, according to a PWC’s report.
“Nigeria is projected to be the fastest-growing market from a revenue perspective over the next five years. This is mainly due to an improved economy, continued growth in domestic tourism, and expansion in the number of available rooms,” the report stated, adding that overall hotel room revenue is expected to expand at a 14.6 percent compound annual rate to US$517 million in 2021 from US$261 million in 2016
The report, entitled Hotels Outlook: 2017 – 2021 stated that despite economic headwinds, the market would expand, benefitting from an improving economy, continued growth in domestic tourism, and expansion in the number of available rooms.
Inbound travellers, amid a difficult and volatile economic climate, are expected bolster the projected growth.
“A number of projects in Nigeria have been delayed or postponed in the wake of the recent economic uncertainty,” the report noted.
Elsewhere on the African continent, a number of initiatives have taken place to promote tourism and positively impact the hotel market. The hotel market in Nigeria rebounded in 2016 with a 5.2 percent increase in total revenue.
Pietro Calicchio, Hospitality & Gaming Industry Leader for PwC Southern Africa, says: “Africa’s hotel sector has remained resilient in the face of strong economic headwinds.”
“Many destinations have invested in improving and promoting the quality of their tourism offering and are reaping the benefits. In addition, we are seeing the impact of technological disruption play a part over the past year in certain countries,” Calicchio said.
The PwC’s report, which is in its 7th edition, features information about hotel accommodation in South Africa, Nigeria, Mauritius, Kenya and Tanzania. This year we take our African view a step further, with looking into Ghana and Ethiopia as emerging hotel markets.
South Africa is projected to be the next-fastest growing market with a 9.3 percent compound annual increase in room revenue, most of which will be generated by rising average room rates and continued but moderating growth in tourism.
“One of the positive outcomes for the hotel market in South Africa was the amendment of visa requirements that required foreign visitors from certain countries to provide biometric data in person. International visitor numbers to South Africa rebounded significantly in 2016 with a 12.8 percent increase as compared to the 6.8 percent decrease in 2015,” Calicchio noted.
Overall, room revenue in South Africa rose 12.2 percent to R15.8 billion in 2016, the biggest increase since 2013. Over the past five years, the occupancy rate has risen, surpassing the 60 percent level and reaching 61.2 percent in 2016. This gain has stimulated interest and a number of new hotels are expected to open in the next five years.
The revenue for the five markets, as a group, is forecast to rise at an 8.7 percent compound annual rate to R59.2 billion in 2021 from R39 billion in 2016.
In 2016 the number of tourists to Mauritius increased by 10.8 percent. The hotel market has benefitted from an increase in direct flights and government investments in tourism. Room revenue increased by 15.3 percent in 2016 due to the 9% increase in guest nights together with an increase in average room rates.
However, Mauritius is projected to be the slowest growing of the five countries, with a 6.2 percent compound annual increase in room revenue. While there is a moratorium on new projects in place in the near term, the report projected that relatively few rooms would be added through 2021, with growth in the non-hotel inventory easing pressure on average room rates.
The tourist market in Kenya is reported to have rebounded in 2016 following four years after decline. The Government has introduced a number of initiatives to boost tourism. Hotel room revenue is projected to grow at 6.2 percent compounded annually to 2021.
Over the last year, tourism increased in Tanzania despite the imposition of an 18 percent VAT on tourism services.
“The hotel market in each country is affected by both the local and global economy, with some countries being more dependent on foreign visitors than others. We are also seeing certain local governments continuing to invest in infrastructure and implementing other plans to unlock the substantial potential that this industry has to bring,” Calicchio added.