Hotel Development in Africa Accelerates

According to the findings of this year’s Hotel Chain Development Pipeline Survey, produced by W Hospitality Group, there is a surge in hotel development in Africa, with a jump in the development pipeline to 270 hotels and nearly 50,000 rooms, and with sub-Saharan Africa (SSA) exceeding North Africa by almost 70%.

The data reveal a modest recovery in North Africa and increasing confidence in SSA - only two years ago the number of rooms in the North African pipeline was the same as that in sub-Saharan Africa. This year’s survey is based on contributions from 37 international hotel chains with 80 brands between them.

TABLE 1 2015 Hotel Chain Development Pipelines in Africa Regional Summary
	2011		2012		2013		2014		2015
	Hotels	Rooms	Hotels	Rooms	Hotels	Rooms	Hotels	Rooms	Hotels	Rooms
North Africa	75	17,038	77	17,217	73	18,065	73	16,449	79	18,565
Sub-Saharan Africa	76	13,700	100	17,109	115	18,191	142	23,283	191	31,150
TOTAL	151	30,738	177	34,326	188	36,256	215	39,732	270	49,715

The SSA region has far more national markets than North Africa, 49 countries vs five and these have historically been underserved with branded hotels. It’s now time for them to catch up and they are: Mauritania, for example, with no existing branded supply, now has three branded hotels in the development pipeline.

Growth in the pipeline in North Africa has slowed considerably, impacted by unrest and political conflict. For example, Libya, a country which many groups were focusing on just two years ago, has seen no new hotel development deals. Egypt, which has traditionally been a major growth market, lost some projects to delays and cancellations in 2014.

As a sub-region, West Africa has by far the greatest number of rooms in the pipeline, more than double East Africa. This is largely thanks to Nigeria, which became the largest economy on the continent in 2014 after it rebased its GDP figures. It has the largest population and the largest number of urban conurbations in one country, with the exception of South Africa.

As in previous years, Southern Africa continues to lag behind, with fewer rooms in development this year than in Central Africa and with the highest number of countries with no activity at all – five, namely Botswana, Lesotho, Malawi, Swaziland and Zimbabwe.

It is important to distinguish between deals which are still in the planning stage and those which are becoming reality, with construction started.  Table 3, below, shows the proportion of the deals (rooms) which are actually under construction – sub-Saharan Africa has many more signed deals than North Africa, but the latter has 78 per cent of the pipeline rooms on site, compared to 55 per cent in SSA.

TABLE 3 2015 Hotel Chain Development Pipelines in Africa SSA vs. North Africa by Pipeline Status
	Hotels	Rooms
		Total	Onsite Construction
Sub-Saharan Africa	191	31,150	17,070	55%
North Africa	79	18,565	14,428	78%

Looking at individual countries, Nigeria has by far the most rooms in the chains’ development pipelines, over 8,500 rooms in 51 planned new hotels.  That is more than the entire pipeline in Central Africa and East Africa combined!  Table 4 shows the top ten pipeline countries by number of rooms:

TABLE 4 2015 Hotel Chain Development Pipelines in Africa Top 10 Countries by Number of Rooms
		Hotels	Rooms	Average Size
1	Nigeria	51	8,563	168
2	Egypt	18	6,440	358
3	Morocco	31	5,474	177
4	Algeria	13	2,749	211
5	Tunisia	12	2,444	204
6	South Africa	13	1,662	128
7	Kenya	8	1,510	189
8	Libya	5	1,458	292
9	Ghana	8	1,399	175
10	Uganda	9	1,397	155

In 2015, all the countries in the top 10 (with the exception of Algeria and Libya) saw an increase in their pipeline from the previous year.  Kenya and Uganda saw the largest increases, at over 100 per cent and 90 per cent respectively, albeit from a much smaller base than the four leading nations.  Despite the continued difficulties that the country has faced, Egypt recorded a substantial 37 per cent increase in its pipeline, indicative of returning confidence. 

Nigeria, Egypt and Morocco have occupied the top three slots since 2011.  Whilst Nigeria has 33 per cent more rooms than second-placed Egypt, the average size of each planned hotel in Nigeria is less than half that in Egypt.  New hotels in North Africa generally, and particularly in Egypt, are of a much larger size. 

Egypt also has the highest “performing” pipeline in Africa, with almost 5,500 rooms under construction, compared to “only” 3,400 in Nigeria.  Table 5 analyses the top 10 countries with the highest proportion of planned hotels under construction.

TABLE 5 2015 Hotel Chain Development Pipelines in Africa Top 10 Countries by Pipeline Status
Rank	Country	Hotels	Rooms			Rank – All Deals
			Total	Onsite Construction
1	Egypt	18	6,440	5,480	85%	2↑
2	Morocco	31	5,474	3,795	69%	3↑
3	Nigeria	51	8,563	3,369	39%	1↓
4	Algeria	13	2,749	2,494	91%	4↔
5	Tunisia	12	2,444	1,501	61%	5↔
6	South Africa	13	1,662	1,196	72%	6↔
7	Libya	5	1,458	1,158	79%	8↑
8	Ethiopia	8	1,326	1,117	84%	-↑
9	Kenya	8	1,510	1,050	70%	7↓
10	Rwanda	7	1,351	953	71%	-↑