Africa’s hotel industry ripe for further growth


Africa’s hotel industry has experienced growth over the last two decades. The proliferation of brands across the continent has taken the supply of hotels to the next level and whilst hotel opportunities in Africa can no longer be cherry picked, as in previous years, opportunities in key markets do still abound.

HTI Consulting summarised hotel market performances across 13 African cities for the first half of 2019 as indicated by STR Global, a company providing hotel data benchmarking, analytics and marketplace insights.


Addis Ababa led the 13 African cities assessed in terms of hotel occupancy growth. In the Ethiopian capital a growth rate of 9.7 % has been driven largely by the improved economic environment created under a new government actively attempting to create more economic opportunities. Growth has also continued despite the attempted coup in June of this year.

South African markets also dominate in terms of occupancy growth, despite dampened economic conditions in the country. On the sub-tropical east coast, Umhlanga, with an occupancy growth rate of 5.5%, led the South African markets, driven by the development and expansion of this area as a corporate and tourist hub. In Cape Town, overall occupancy growth was 4.1%, with the less price-sensitive five-star market driving growth (this segment experiencing an 8.5% increase YTD July 2019). Rooms sold in the city grew by 6.2%, indicating that the market is gradually absorbing the high levels of new supply that have recently entered the market. As a more affordable domestic destination and event hub, Durban’s hotel occupancy rate increased by 1.8%.

Another city worth mentioning, Gaborone, has shown a significant turnaround since the end of 2017, when the city recorded a -6% decline in average occupancy. Here, improved economic conditions combined with limited new supply (prior to the Hilton Garden Inn opening) have seen occupancy levels grow by 4.9%.


Lusaka’s occupancy performance was the weakest of the cities assessed driven by dampened economic conditions. Growth forecasts for Zambia are at 1.9% for 2019, down from 3.7% in 2018. This, combined with high levels of new supply in the country’s capital, saw occupancy rates decline by a substantial 18.1%.

A 5.2% occupancy decline in Pretoria is no real cause for concern, however this can largely be attributed to new supply, including the Protea by Marriott Loftus Park with 152 rooms. In fact, despite lower occupancy, rooms sold increased by 6.3%, which indicates a growth in demand.

On the other hand, South Africa’s contracting economy appears to be the main factor affecting a 2.6% drop in occupancy in business hub Sandton.

Government activity in Tanzania continues to constrain investor sentiment and create a knock-on effect on occupancy growth, with Dar es Salaam seeing occupancy drop by 2%.

With the continent strongly influenced by currency fluctuations, none of the markets assessed showed Average Daily Rate growth in USD terms, however the least impacted by currency constraints was Gaborone. In local currency ADR grew by 7.4% in Gaborone, as did Accra (9%) and Lusaka (17.9%).

Of the bottom five ADR markets, South African markets – Sandton, Cape Town, Durban and Pretoria – all showed declines in ADRs in local currency as well as USD. The continued depreciation of the rand combined with increasing competition and increased price sensitivity negatively impacted rate increases in 2019.


With an additional planned 2,455 hotel rooms, Addis Ababa has the biggest pipeline for development under construction, meaning in future years ADR and occupancy rates will come under pressure here.

It is encouraging to note that Nairobi and Lagos are experiencing continued growth in rooms sold as markets recover from recessionary conditions (Lagos) and terror attacks (Nairobi). Whilst the high level of new supply in Nairobi has dampened conditions, individual properties in strategic locations are achieving strong, above average performances Cape Town will experience a new round of midscale room supply in 2019 with the opening of the 157-roomed Signature Lux, as well as an additional 735 midscale rooms entering the market in 2021 and 2022. This will continue to impact on the occupancy and rates of this segment.

The market to watch is South Africa’s Umhlanga node. Occupancy has increased consistently in recent years whilst ADR increased by 2.9% YTD.

Whilst this is not a significant increase, given the constraints of the South Africa economy, this is positive. Although new supply is planned in the market (over 400 rooms), this is expected to be absorbed relatively swiftly, particularly if economic conditions in South Africa improve in the medium-term.

As new international brands continue to enter key markets in Africa, conditions are becoming increasingly competitive. However, by finding the right project in the right location, good investment returns are still possible in markets across the continent.