By Abdi Ali
Published September 4, 2015
Addis Ababa is the most expensive place in Africa for a good night’s sleep.
According to STR Global, a hospitality research firm, the average price for a hotel room per night in the first six months of 2015 in Addis Ababa was US$231.78 compared to US$215.75 in Lagos (Nigeria), US$144.76 in Nairobi (Kenya), US$122.30 in Cape Town (South Africa), US$105.73 in Casablanca (Morocco), US$103.54 in Cairo (Egypt), US$72.90 in Johannesburg (South Africa) and US$70.70 in Sharm El Sheikh (Egypt).
Speaking ahead of the Africa Hotel Investment Forum (AHIF) that is scheduled for September 30-October 1, 2015 in the Ethiopian capital, Thomas Emanuel, Director of Business Development at STR Global who is expected to report on year-on-year hotel performance in some of Africa’s key travel markets and adding further interpretation and analysis of the main trends, attributes Addis Ababa’s highest hotel rates to what he calls ‘supply and demand’.
Though Ethiopia’s economy has been growing at more than 10% per annum over the past decade, with more conferences coming to the city by virtue of its status as the seat of the African Union and with Ethiopian Airways on a similar growth trajectory to the country, thanks to new routes and increased passenger numbers, there is a high demand for premium hotel rooms. But Addis Ababa, Emanuel says, has a shortage of such hotels.
“By comparison, Johannesburg is a long-established, sophisticated international city, with a large number of 5-star hotels and a competitive market for accommodation,” Emanuel is quoted as having said in a media release issued through Africa Press Organisation of Lausanne, Switzerland.
Looking at how hotel prices have changed over the past year (June 2014-June 2015), STR Global explains, there have been substantial rate rises in Sharm El Sheikh (up 42.5%), Addis Ababa (up 14.9%), Johannesburg (up 11.0%), Cape Town (up 10.8%) and Cairo (up 10.6%). Whereas, there has been a recovery in Lagos (up 5.8%) and Nairobi remains the same, Casablanca has suffered a 4.0% decline.
The increases in Sharm El Sheikh and Cairo can be explained as a recovery in tourism to Egypt, following several years of political unrest. Cape Town’s improvement is due predominantly to increased demand and no recent increases in supply since the FIFA World Cup in 2010.
In the face of the recent terrorism incidents in Kenya, Nairobi’s hoteliers have chosen to maintain rates but they have suffered with lower occupancy.
There has been a combination of factors to explain the price of hotel rooms in Lagos. First, there is a hotel development boom in Lagos with 3,611 new hotel rooms in the pipeline, according to W Hospitality Group, second, there has been a collapse in the oil price, which is damaging Nigeria’s heavily oil-dependent economy and third, occupancy has fallen below 50%.
The rate decline in Casablanca is due in part to economic weakness in France, its major source market and in part to currency fluctuations.
Matthew Weihs, Managing Director of Bench Events which organises AHIF that attracts major international hotel investors in Africa, says “The wide disparity in room rates with exceptional prices being achieved in places where there is a shortage of supply, make it clear that there are parts of Africa that offer very attractive prospects for hotel investors.”