Insights from the Frank Knight Africa Hotels 2018 Report

Research firm Frank Knight recently released the Africa Hotels 2018 report, a study on the performance and trends in Africa’s Hotels sector. Here are the highlights of the report:

Room for growth

The United Nations World Tourism Organisation (UNWTO) estimates that Africa’s tourist numbers will grow at one of the fastest rates in the world. With international tourist numbers hitting 134 million by 2030, more than double 2016’s figure of 57 million. Currently, Morocco is Africa’s top tourist destination with 10 million annual international arrivals. However, the report predicts stronger growth in the East, West and Central Africa regions; a situation that Kenya can benefit from with proper positioning and differentiation.

Overview of Africa’s hotel market

At the moment South Africa is Africa’s largest supplier of branded and chain hotels accounting for a third of the continents hotels; followed by countries in North Africa including Egypt, Morocco and Tunisia. An interesting fact highlighted in the report is that more than half of Africa’s major cities have fewer than five chain hotels each, which shows that there is room for growth.

East Africa also shows promise, accounting for close to a third of the continent’s hotel projects that are under development. This is mainly attributable to international hotel chains that are expanding. For instance, Hilton hotel launched a $ 50 million initiative to add 100 African properties in the coming five years from 2017.

Radisson blu Hotel waterfront

Major Hotel Chains in Africa

Marriot International is the chain with the largest hotel network in Africa. Its 2014 acquisition of South African hotel chain Protea and merger with Starwood hotels in 2016, has brought its total number to 146; with a presence in 20 African countries. The group plans to have in excess of 200 Africa-based hotels opened or in development by 2022.

The report ranks AccorHotels as the second largest hotel brand in Africa with 116 hotels spread out in 20 African. AccorHotels include popular brands such as Fairmont, Raffles ibis and ibis Budget. Tsogo Sun follows AccorHotels with 96 hotels in 7 African countries, City Lodge with 58 hotels in 4 countries, Radisson Hotel Group with 42 hotels in 20 countries, Louvre Hotels Group with 41 hotels in 13 countries, Hilton Hotels & Resorts with 39 hotels in 14 countries, International Hotels Group with 28 hotels in 10 countries and Best Western with 24 hotels in 9 countries.

Disruption and emergence of a new market

The report notes the rise of new demand for flexible and affordable types of accommodation across Africa, driven by younger travelers. A trend that is different from Africa’s hotel’s prevalence for luxuries high-end market and has been powered by shared accommodation company Airbnb. The company announced that it has so far 100,000 listings in Africa that have hosted 1.2 million guests in 2017. However, the disruption by Airbnb has not had a significant impact on African hotels.

Performance Review

Generally, hotels in Africa improved their occupancy rate from 54.9 percent in 2016 to 58 percent in 2017. The major reason for this growth was an improvement on the occupancy rate for the North Africa region which has been bogged by security concerns for some time. The region’s 2017 occupancy rate was the highest since 2010, standing at 54.6 percent. However, this is still way below the rates achieved a decade ago when the region was booming with tourism.

Hotels in the sub-Saharan region had a sixth of its hotel rooms occupied, which is higher than North Africa. Additionally, the region also charged higher daily room rates at US$121.35. For individual countries Seychelles and Mauritius were the continent’s top performers both in occupancy and average daily rates, remaining largely unaffected by security concerns experienced in other regions. Additionally, the two countries majorly depend on luxury resort hotels, a segment that the report predicts will help them retain position as top performers in 2018.



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