By Abdi Ali
Published August 2, 2016
Tourism is one of the fastest growing sectors of Africaâ€™s economy despite ongoing global economic problems.
Despite the “contraction of the global economy, the sector has significant potential to create jobs and uplift inclusive economic growth across the continent,” PricewaterhouseCoopers LLP (PwC), a firm that specialises in assurance, advisory and tax services, concludes in its report that looks at hotel accommodation in South Africa, Nigeria, Mauritius, Kenya and Tanzania.
Titled Hotels Outlook 2016 â€“ 2020, the report says that increase in the number of foreign visitors into Africa assures the continent of steady growth of its hotel industry over the next five years.
Though South Africa’s economy has weakened, Pietro Calicchio, Industry leader of Hospitality in charge of PwC Southern Africa says â€œthe overall outlook for hotels in South Africa is expected to remain positive.â€
The southern African country’s hotel room revenue is projected to expand at a 7.8% compound annual rate to ZAR20.6 billion in 2020.
â€œThe devaluation of the rand and the relaxation of certain visa regulations has had a positive impact on the tourism industry in South Africa, making the country a more attractive tourism destination. This has also had a positive impact on the number of foreign visitors to South Africa over the past six months,â€ says Calicchio.
The requirement that foreign travellers appear in person at South African embassies to have their biometric information taken while some countries such as India, Russia and China have very few South African visa processing centres led to the declining number of tourists coming to South Africa.
Room revenue in South Africa, Nigeria, Mauritius, Kenya and Tanzania rose 6.7% in 2015, the largest gain since 2011. Tanzania had the largest increase with a 14.4% gain, the result of a large increase in the average room rate that offset a drop in stay unit nights.
PWC forecasts an additional 2 600 hotel rooms to be added over the next five years in South Africa where hotel room revenue are expected to grow by 11.9% in 2016 to ZAR15.8 billion.
The hotel sector in Mauritius experienced an increase in stay unit nights in 2015, but a drop in the average room rate that resulted in a 6.7% increase in room revenue.
Whereas Nigeriaâ€™s long-term prospects for the hospitality sector remain positive, Kenyaâ€™s economic growth has been strong and a number of initiatives have contributed to a recent increase in the tourism industry.
Between 2016 and 2020, South Africa’s occupancy rates and visitor numbers are expected to increase in the hotel sector. The number of available hotel rooms are projected to rise at a 0.8% compound annual rate to 63 700 in 2020 from 61 100 in 2015. Stay unit nights are expected to increase at a 1.9% compound annual rate to 14.6 million in 2020 from 13.3 million in 2015. With stay unit nights growing faster than room supply, the occupancy rate for hotels is forecast to rise from 59.6% in 2015 to 62.6% in 2020.
Though Nigeria’s hotel market has not fared as well as South Africa’s, with stay unit nights dropping 12% and room revenue down by 3.6% over the past two years, several new hotels are planned or under construction in the West African country that is projected to get 4 700 rooms more during the next five years. Hotel room revenue is expected to grow to US$507 million in 2020 from the US$321 million achieved in 2015, due to increases in both stay unit nights and average room rates.
In Mauritius, where the number of tourist arrivals increased by 10.9% in 2015, the number of available hotel rooms is expected to increase at a 2.8% compound annual rate, rising to 15 600 in 2020 with hotel room revenue forecast to grow at a 10.6% compound annual rate to 920 million Euros in 2020.
While Kenyaâ€™s hotel market revenue is projected to grow at 6.1% compounded annually to 2020, Tanzaniaâ€™s hotel room revenue, that amounted to US$222 million in 2015, is expected to grow by 10.8% compounded annually to US$371 million in 2020.
â€œThe hotel market in each country is affected by both the local and global economy, with some countries being more dependent on foreign visitors than others,” says Calicchio. “The growth forecast is therefore dependent on how well both the local and global economy performs and grows over the next five years.â€