North Africa, Accor, Marriott lead in Africa hotel development

Egypt and Morocco have been announced as the leaders in Africa hotel development this year, while Accor and Marriott International led the hotel and management brands.

The two North African countries and two international hotel chains were confirmed leaders in Africa in this year’s African hotel chain development pipeline survey conducted by W Hospitality Group, in association with the Africa Hospitality Investment Forum (AHIF).

This year’s annual survey, which is widely acknowledged as the industry’s most authoritative source, has, as of Q1 2022, a record 42 global and regional (African) contributors, reporting on a pipeline of hotel development activity totalling around 80,300 rooms in 447 hotels, in 42 of Africa’s 54 countries.

Looking first at the number of rooms physically under construction, Morocco and Egypt are ahead of the pack, with 5,577 and 6,142 rooms respectively. They are followed by Ethiopia, 3,871; Cape Verde, 3,016; Nigeria, 2,544; Kenya, 2,450; Algeria, 2,337; Tunisia, 2,280; South Africa, 1,948 and Senegal, 1,919.

In Tunisia, Kenya and Morocco, over three quarter of the pipeline is “onsite”, whereas in Egypt, 71 percent is just at the planning stage, reflecting its relatively “young” pipeline (a lot signed in the last three years).

While Nigeria has 45 percent onsite; eight of the 15 hotels (with half of the total rooms) that have started construction have stalled, and the sites are closed.

However, Egypt is leading with over 21,000 rooms in 85 hotels in development, up 20 percent on last year; and is streaking ahead of the pack. It has almost three times the number of new rooms planned as Morocco, and almost four times Nigeria, which was top of the table for many years. What is more, with continued signing activity (20 hotels with about 5,250 rooms last year), Egypt now accounts for over 25 percent of the total hotel development pipeline. Morocco has 7,209 rooms in development, spread across 50 new hotels; Nigeria has 5,619 rooms in 33 hotels, Ethiopia has 5,206 rooms spread across 29 hotels and Cape Verde has 4,639 rooms in 17 hotels. The next five places are taken by Algeria, 3,202 rooms, Kenya, 3,155 rooms, South Africa, 3,133 rooms Tunisia, 2,918 rooms and Senegal 2,693 rooms.

Notably, four out of the five North African countries are in the top ten; and the top ten countries represent 67 percent of the total hotels, and 74 percent of the rooms, in the survey.

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While Africa’s hotel development pipeline is at its strongest ever, 80,291 rooms being planned or constructed, the top-line number masks a reduction in Sub-Saharan Africa, where there has been a greater amount of hotel investment in recent years. Of the six sub-Saharan countries in the top 10, only Cape Verde has seen an increase in planned rooms, 33 percent, whilst the “power houses”, Nigeria, Ethiopia, Kenya and South Africa have between them seen a decline of 29 percent; Nigeria is down 41 percent. There are three reasons for the reduction: fewer new opportunities in the region; opening of some 2,700 rooms in 15 hotels last year, and a pipeline “cleansing” which the hotel chains do periodically to remove various projects, which are unlikely to go ahead.

Looking at the development activity of the hotel chains, both Accor and Marriott are nearly as dominant as Egypt and Morocco, each representing just over 25 percent of the entire pipeline. Accor has 20,857 rooms in development, spread over 107 properties; Marriott has 20,248 rooms spread over 103 properties. Hilton, in third place, has around half as many rooms, 10,505 in 55 hotels. Radisson, 4th, has 6,248 rooms in 35 hotels. The next six places are taken by IHG, 3,136 rooms, Barceló, 2,488 rooms, Hyatt, 1,995 rooms, Meliá, 1,743 rooms, Louvre, 1,273 rooms, and Minor, 1,203 rooms.

IHG merits comment, due to its growth of over 10 percent. It signed a deal for four Indigo-branded hotels in Egypt, with 650 rooms in total, as well as a 300-room InterContinental hotel in Cairo’s New Capital.

Analysis of the number of rooms under construction, as opposed to those merely being planned, changes the hotel chain ranking substantially, because Accor has only 26 percent of its pipeline onsite, whereas Marriott and Hilton have around 57 percent and Radisson 85 percent. This puts Marriott in top spot, Hilton second, Accor third and Radisson fourth. The top ten combined have 82 percent of all the rooms under construction in Africa, and the top four account for fully 66 percent of the total, up from 58 percent last year.

Trevor Ward, managing director, W Hospitality Group said: “The chains anticipate that 200 new hotels are expected to open this year and next, although their expectations can sometimes be over-optimistic. After a positive trend in 2019, the actualisation of hotel deals was less than 30 percent in both 2020 and 2021 – however, that was quite understandable with pandemic travel restrictions killing the demand for hotel rooms.”

Trevor continued: “I am not surprised by the slow-down in the number of deals signed in sub-Saharan Africa, as the past couple of years have seen not only the pandemic, making it more difficult to travel and meet new partners, but also less appetite from investors for major markets such as Ethiopia, Nigeria and South Africa. However, what does surprise me is that the majority of investment is going into upscale, upper upscale and luxury hotels, when there is very strong demand across Africa for decent quality branded budget and midscale hotels.”

Matthew Weihs, managing director, The Bench, which organises AHIF, concluded: “While the hospitality industry has just been through the bleakest period in my professional career, it is fascinating to see that the pandemic has done nothing to dent long-term investor confidence in hospitality. If anything, the savviest financiers have seen it as an opportunity. They have been encouraged by enlightened governments, such as Morocco’s, which have spent $ billions on new infrastructure to incentivise investment in tourism. What’s more, judging by our other conferences this year that have sold out, we are seeing how keen people are to travel again and how valuable it is to meet face to face, rather than over a video link. I am confident that when AHIF takes place on 2-4 November, in Taghazout, close to Agadir, we will see the atmosphere buzzing, with highly productive networking and with more deals announced than ever before.”

An update to the pipeline development survey, along with in-depth insights, will be presented by Trevor Ward at AHIF. The event is the leading conference of its kind in Africa, connecting business leaders and fuelling investment in tourism projects, infrastructure and hotel development across the continent.

The W Hospitality Group, a member of Hotel Partners Africa, specialises in the provision of advisory services to the hotel, tourism and leisure industries, providing a full range of services to clients who have investments in the sector, or who are looking to enter them through development, acquisition or other means. In sub-Saharan Africa W Hospitality Group is regarded as the market leader due to the market and financial expertise of its staff, its worldwide knowledge, and its commitment to its clients. In Africa, W Hospitality Group has to date worked in 40 countries on the continent, from its Lagos and Addis Ababa offices.