The growth potential of Africa is increasingly recognised by international hotel operators, investors and developers with both global and local hotel chains targeting Africa as a growth region, due to both its relative undersupply of international-quality hotels, and the expectation of increased demand for rooms.

Underpinning this are Africa’s long-term economic and demographic growth prospects, which have continued to attract hotel groups’ interest despite a slowdown in overall African economic growth in recent years.

Pan-African GDP growth dropped to 2.1% in 2016, its lowest level in more than two decades, primarily due to the impact of lower commodity prices on its major oil-dependent economies. However, growth is estimated by the International Monetary Fund to have
recovered to approximately 3.5% in 2017.

The large oil-driven economies of Nigeria and Angola are gradually moving out of recession, while growth rates have remained resilient in less resourcedependent countries such as Kenya,

Ethiopia, Tanzania, Côte d’Ivoire and Senegal. These countries are forecast to maintain annual GDP growth in the 5-8% range over the next five years. 

Africa’s population is growing at a faster rate than that of any other global region; it is currently home to around 1.2 billion people, but UN projections suggest that this figure will more than double by 2050 and that it will pass 4 billion by the end of the century.

Growth will be increasingly concentrated in the large cities of Sub-Saharan Africa, with the populations of cities such as Luanda,
Lagos, Dar es Salaam, Nairobi and Addis Ababa forecast to grow by more than 80% during the 2015-2030 period.

Africa’s fast-growing, economically developing cities will need increased numbers of hotel rooms to accommodate both business travellers and rising tourist demand.

Over the long term, the UN World Tourist Organization forecasts that international tourist numbers in Africa will grow at one of the fastest rates globally. Africa received 57 million international tourist arrivals in 2016, but the UNWTO projects that this will reach 134 million by 2030.

At present, Morocco is the top destination with over 10 million arrivals, but future growth is forecast to be strongest in the East, West and Central regions of Africa.

Figure 1: Annual international tourist arrivals (millions) – top ten countries in Africa

Source: United Nations World Tourism Organization. 2015 or 2016 data, depending on availability

Hotel market Overview
Hotel supply levels vary greatly across Africa.

The distribution of Africa’s current supply of branded and chain hotels is illustrated by the hotel density map on pages 4-5. The current hotel stock is heavily concentrated in a small number of markets. South Africa has the largest supply, with almost 30% of the continent’s chain hotels. The largest hotel markets in South Africa are Johannesburg and Cape Town, but chain hotels are spread widely across the country, due in large part to the extensive hotel networks of local brands such as Protea Hotels, Tsogo Sun and City Lodge.

Outside of South Africa, the largest concentration of chain hotels is in the North African countries of Egypt, Morocco and Tunisia. Resort locations such as Sharm El Sheikh, Hurghada and Marrakesh are among the biggest markets in these countries, but international hotel chains also have a reasonably large presence in commercial cities such as Cairo and Casablanca, where demand is driven by business travellers in addition to tourism.

Elsewhere in Africa, the tourist islands of Mauritius, the Seychelles and Zanzibar all have a significant presence of branded hotels and resorts. In contrast, some of Africa’s largest cities, including Kinshasa, Khartoum and Addis Ababa, have only a handful of international branded hotels. Across Africa, more than half of the continent’s capital cities have fewer than five chain hotels each.

The distribution of pipeline projects varies significantly compared with the existing supply, reflecting the increased focus of
international chains on markets currently perceived as being undersupplied. Most strikingly, 35% of projects under development in the continent are in West Africa, which is home to only 9% of the current supply. The greatest concentration of these projects is in Nigeria, primarily in Lagos and Abuja, where multiple hotels are under development for international brands including Hilton, Sheraton and Marriott. 

The East Africa region also accounts for a significant share of pipeline projects, with 26% of the projects under development.
Hotel development hotspots in East Africa include the major cities of Kenya, Ethiopia and Tanzania.

Although it is a comparatively wellsupplied region, North Africa continues to see new development, accounting for around 29% of pipeline projects. This stems from the expansion of major multinational chains, and from Middle Eastern hotel developers and chains entering North Africa.

Across the continent, development activity is being driven primarily by the expansion plans of the larger multinational hotel groups. All of the major global players have multiple hotels under development across Africa, and several of them have made eye-catching
announcements about their future African plans. Hilton, for example, launched its US$50 million Africa Growth Initiative in late 2017, with the aim of adding 100 African properties to its portfolio over the next five years. The activities of other major hotel groups are outlined on pages 6-7.

Figure 2: Number of chain and branded hotels – top ten countries in Africa

Source: Knight Frank Research. Hotel numbers exclude lodges, safari camps, chalets and cruise-hotels. Data as at December 2017

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