HOT TOPIC
HEALTHY OUTLOOK FOR AFRICAN HOTELS
Hotels in Africa’ s most tourist-friendly countries are poised for profitable years ahead – as long as governments don’ t mess up and the global economy remains stable. By Lesley Stones(@ lesley _ stones)
Auditing firm PwC recently released its five-year outlook for Africa’ s hotel sector Hotels Outlook 2016 – 2020. According to the report, more hotels are being built and the outlook is positive, but ill-advised government action could destroy years of hard work in an instant. The most obvious example is South Africa, where visitor numbers tumbled after disastrous changes to the country’ s visa regulations.
The number of visitors to South Africa fell from 9.5 million to 8.9 million in 2015 after growing steadily for years. Arrivals from China suffered most, diving by 46 %, while Indian visitors fell by 23.5 % as new rules forcing foreigners to personally apply for visas at South African embassies meant many simply didn’ t bother.
“ The visa regulations and the global economy had a large impact on that decrease,” says Pietro Calicchio, an expert in hospitality and gambling with PwC. Some of the stringent rules were eased after widespread protests from the tourism trade, and foreign visitors jumped by a healthy 16.8 % for January to April 2016 compared to the same period last year. For 2016 as a whole, PwC expects a 12.4 % increase from the previous year.
Despite the turmoil, hotel room revenue still climbed by 8.1 % in 2015 to R14.2 billion, largely because of a 6.5 % rise in average room rate. Room revenue should grow by 11.9 % this year to R15.8 billion.
Since the UK is the biggest source of visitors from non-African countries, there’ s a concern that the economic fallout from Brexit – the UK’ s withdrawal from Europe – will hit the number of Brits who can afford to travel. Calicchio says it’ s difficult to predict the impact, but if Britain enters a recession people will have less disposable income. At the moment, however, South Africa remains an attractive destination for British holidaymakers thanks to the favourable exchange rate.
Over the next five years 2 600 new hotel rooms will join the market,
54 % of them in Cape Town. Fivestar hotels are the best performers occupancy-wise, achieving 79.5 % in 2015, with an average cost of R2 370 per room. However, they only account for 5 % of hotel beds.
PwC also analyses the hotel industry in Nigeria, Mauritius and Kenya and its latest report added Tanzania for the first time, too. The Tanzanian government is investing heavily in hotels and enthusiastically promoting the country as the leading destination in Africa. But its efforts could be undermined by trying to milk the industry too hard. It added a tourism tax of 18 % in July and increasing the cost of accommodation and national park entry fees is likely to dampen visitor numbers.
Overall, however, Tanzania is seeing a very strong economic boom and tourism is contributing 14 % to the GDP, Calicchio says, with more than 1.1 million tourists in 2015. Six new hotels will add 600 rooms to the market in the next five years, but with rates already being quite
South Africa draws most of its non-African visitors from the UK, with 407 486 in
2015. That was up 1.4 %
from a disastrous 2014 when the numbers dipped
by 6.8 %, largely due to damaging visa regulations.
Mauritius is expected to grow
its hotel rooms to 15 600 by
2020, with room revenue forecast to
grow at 10.6 % a year to € 920 million in 2020.
Tanzania’ s hotel rooms earned
$ 222 million in 2015 and that’ s
expected to grow by 10.8 % annually to $ 371 million in 2020.
Visitors from the US dipped by 3.9 % in 2015, Germany
fell by 6.5 % and Australia fell by 10.8 %. Five-star hotels had the highest occupancy rates at 79.5 %.
58 Travel Update | issue 9