Investment Opportunities Abound in Africa’s Hospitality Sector
By Abdi Ali
Published August 17, 2017
The hospitality sector in Africa’s emerging markets looks set to profit from foreign investment and an influx of foreign travellers, making them integral to the expansion strategies of some of the world’s leading hotel developers.
Hotels Outlook: 2017-2021, a report by PriceWaterHouseCoopers that looks at hotel accommodation in South Africa, Nigeria, Mauritius, Kenya and Tanzania, says
that though the potential for foreign investment has improved substantially in Africa over the past several years, the continent is faced with challenges
such as social unrest, unstable electricity supply and one of the most severe droughts witnessed in recent years.
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“The growth potential of Africa is high mainly because of the rapid economic growth in some economies, a growing middle class and an increase in visits from
foreign visitors,” says Pietro Calicchio, Hospitality & Gaming Industry leader for PwC Southern Africa. “The emerging markets are a sought after destination
for foreign investors – it is in these markets where there is continued economic growth and a need for additional infrastructure. In addition, governments
and policy makers are introducing a range of tax incentives and other incentive schemes to foreign investors.”
Besides its traditional focus, PWC has included Ethiopia and Ghana as ’emerging hotel markets’ in the seventh edition of its Hotels Outlook: 2017-2021
report.
PWC says Ethiopia’s ‘hotel sector is poised to benefit from an increase in the number of inbound travellers with the expected opening of some international
hotel brands’ and that ‘five international hotel brands [are] under construction’ in the horn of Africa country.
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Total tourist arrivals in Ethiopia, PWC says, increased from 817860 in 2015 to 868780 in 2016 and that 2017 is expected to receive 918010 tourists.
Government plans include expanding Ethiopian Airlines’ footprint of regional and international routes and Addis Ababa international airport is also
undergoing expansion that will enable it to service 20 million passengers a year by 2019.
Addis Ababa will continue to grow as a regional business hub, supporting expansion in the hotel sector. Hotels in the city currently have a 60% occupancy
rate. Addis Ababa is host to numerous conferences. This is mainly because it has the third-largest diplomatic community in the world, after New York and
Geneva.
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“The growing presence of international brands in the country demonstrates confidence in Ethiopia’s tourism growth, particularly opportunities linked to
business and diplomatic travel,” Calicchio says.
With the government diversifying the economy to include hospitality and tourism sector in the face of failing oil and commodity prices, the World Travel &
Tourism Council (WTTC) expects Ghana’s tourism industry that grew 1.2% from 2015 to 2016 to expand by 5.6% in 2016 and maintain an annual growth rate of 5.1%
per annum from 2017 through 2027.
There is expected to be an increase in the number of business travellers to the country as the government embarks on a number of initiatives to stimulate
economic growth in a country that currently has 2723 hotels and lodges.
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PWC says the construction of a third terminal at Accra’s Kotoka International Airport and allocation of funds for the repair of roads to popular tourist
destinations will enable the hotel industry to grow 1.1% in 2017, 2.1% in 2018 and 2.3% in 2019.
“Having regard to the investment by foreign investors in the industry through the establishment of high-rated hotels, and an increasing number of tourists
and business travellers, it is expected that there will be continuous growth in the industry,” Calicchio says.
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