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Hotel Valuation Index: Africa

The third edition of the HVS/STR African Hotel Valuation Index offers critical information on 21 African hotel markets and the countries, including hotel value changes and projections through 2016 and intelligence on market dynamics.

african hotel valuation index Hotel Valuation Index: Africa Hotel Valuation Index Africa Market Value Change

african hotel valuation index Hotel Valuation Index: Africa Hotel Valuation Index Africa Market Value Change LegendNumerous factors influence the value of an individual asset, including the property’s age, condition, location, amenities and services, brand, management expertise, and reputation. These factors must all be considered in the context of the hotel’s specific competitive market, including the nature, strength, and trends in demand generators; the character and competitive posture of the existing hotels; and the potential addition of any new properties. The value of any individual asset can only be concluded after a thorough investigation of all these factors. And that conclusion will invariably differ—often materially—from the index indicated by the HVI. Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends for investment opportunities.

Note: The 4th edition of the HVS/STR African Hotel Valuation Index will be presented at the THINC Africa 2017 conference in Cape Town from 30-31 August.

african hotel valuation index Hotel Valuation Index: Africa HVS Africa Botswana

Botswana is one of Africa’s success stories.  Real GDP growth has been around 5% per annum over the past 10 years.  After suffering negative growth in 2015, mainly due to the downturn in China and falling commodities prices, the economy grew around 3.7% in 2016.

The Botswana hospitality industry is one sector of the economy continuing to thrive. Marriott announced a new 160 bedroom Protea hotel in the Gaborone CBD.  Cresta Hotels is opening the 83 bedroom Cresta Maun resort in 2017. Much of the economic success is a result of sound macroeconomic policies; resulting in the World Bank describing Botswana as “a development success story”.

This strong endorsement is assisting the overall demand for hotels for business travelers in Gaborone.  In addition, Botswana is lucky enough to have two of the outstanding tourist destinations on the continent, Chobe National Park, and the Okavango Delta, thus drawing significant numbers of leisure travelers to the country.  Combined, business and leisure travelers have resulted in occupancy of 65-70% over the past few years.  Such stable performance, despite a growth in ADR (in the local currency), demonstrates the health of the market.

An improvement in global economies is crucial to further growth in the Gaborone hotel market; higher demand and prices for commodities and diamonds will lead to increased corporate demand, whilst improved economic confidence at home will encourage more tourists to the country.

Botswana enjoys political stability and strong economic recovery that will benefit the Gaborone hotel market. Investors are showing interest again and Hilton has announced the opening of its first property in the capital, proving its confidence in the market’s potential to grow. In 2016, both occupancy and ADR picked up, boosting the values up by 6.1%.

For detailed analysis visit http://hvi.hvs.com/market/africa/Botswana_-_Gaborone

african hotel valuation index Hotel Valuation Index: Africa Cape Verde HVS Africa

Cape Verde’s economy is an exemplary example of a stable political environment and a working democracy. A steady economic growth path has been followed by a rising quality of life for its citizens. This is all despite the country not having an abundance of natural resources, occasional drought, and a small agricultural base. Given this success and the ability of the islands to attract European guests for leisure breaks, HVS felt it was an interesting market to include in the HVI.

Tourism is one of the main contributors to the economy of Cape Verde. Foreign direct investment is active in the country due to high levels of investor confidence arising from a stable political and economic environment and a growing market. The country attracts tourists from Europe, in particular, the United Kingdom, Germany and Portugal due to strong national and cultural ties

The hotel industry is a beneficiary of the FDI that the country enjoys. A new Resort Group property was constructed on Sal Island and launched in November 2016. Thereafter they have plans for several other hotels in the main islands, all of which will be branded by international hoteliers.

The market is evolving rapidly and as such neither occupancy nor ADR can be seen as stable, yet.  However, as both the number of visitors to the islands and hotel supply continue to increase the future for the hotel industry looks positive.

Cape Verde is growing into a mature market, with a stabilized strong occupancy and profitable rate levels. The Resort Group built a strong business model to enhance tourism growth while adding more rooms to the market. Additional flights to the islands have been confirmed and this should push the occupancy up at a steady pace. Occupancy will surpass the 75% threshold and rates are expected to grow by 5%, pushing REVPAR and values up by 10.7%.

For detailed analysis visit http://hvi.hvs.com/market/africa/Cape_Verde

african hotel valuation index Hotel Valuation Index: Africa Egypt HVS Africa

Egypt has had more than its fair share of terror-related incidents. Politically the country still has issues to resolve with marathon court cases against the Muslim Brotherhood featuring prominently in global media. Security concerns are currently exerting a negative impact on the country’s tourism outlook.

The economic landscape of Egypt has been a mixed bag. The biggest news was the announcement of a planned $60 billion infrastructure investment by Saudi Arabia. The economy started to recover in 2014/15, as the government scaled up infrastructure spending and undertook important measures to restore macroeconomic stability. As such the World Bank reported, growth rebounded to 4.2% in 2014/15, double the growth during the previous four years.

Cairo

In Cairo, occupancy increased to above 50% whilst ADR remained flat.  The performance can be attributed to the return of international visitors to Egypt after the political unrest of late 2013 and early 2014. Travel resulting from Eid al-Adha also aided performance in the market.  Hotel values still achieved a respectable 18.6% increase in 2015, although remain below the levels in 2011.

Cairo will experience a slight recovery. The increased demand in corporate guests from the Middle East and Europe will boost the demand up by 6%. The hotels should give priority to occupancy and the ADR will remain stable in real terms. 2016 was a recovery year in Cairo; values shot up to US$78k, the highest figure experienced since 2011.

For detailed analysis visit http://hvi.hvs.com/market/africa/Egypt_-_Cairo

Sharm-el-Sheikh

Sharm-el-Sheikh has not had the same fortunes as Cairo.  Occupancy levels plunged in Sharm El Sheikh following the crash of a Russian civilian aeroplane in early November 2015. A subsequent ban on travel and cancellation of flights to the region from Russia and various European countries severely impacted performance in the Rea Sea destination. Despite challenging trading, values improved slightly, although Sharm remains in last place on the HVI.

Sharm-el-Sheikh’s occupancy is significantly impacted by the violent events that happened within 2015/16. The occupancy rate dropped below 50%, leading the values down by 27.3%. However, whilst this massive drop in values did no good for the hotel businesses, it represented an attractive investment opportunity. Investors can buy at a low price and gain from the cash on sale rather than from the pure operation of the hotel.

For detailed analysis visit http://hvi.hvs.com/market/africa/Egypt_-_Sharm_el_Sheikh

african hotel valuation index Hotel Valuation Index: Africa Ethiopia HVS Africa 3

With a “double-digit” GDP growth that is now something of an official mantra, Ethiopia has become the fastest growing economy in the continent and is commonly referred to as “the capital of Africa” for its political, diplomatic and commercial significance.

The increasing number of inbound tourists along with the new supply of offices in the market enhances a significant demand for international standard hotels, which remains for the most unsatisfied. In 2015, 1 million travelers could not find accommodation up to their standards in the city and there will be 3 million in 2020 if new hotels are not built, according to Awash International Bank. In addition, the large diplomatic community and the political activity in Addis Ababa will push MICE activity up significantly.

Addis Ababa concentrates 80% of the Ethiopian’s hotel supply much of which is outdated and of poor quality. However, the strong economic fundamentals along with the improvement of the infrastructure attract an increasing number of international hotel groups which will account for 46% of the new supply in the next few years.

Occupancy and rates have been steady in recent years. Addis Ababa experienced occupancy regularly up to 80% and the country has the highest room rate in the continent, according to a survey carried out by STR in late 2015.

Hotels’ values in Addis-Ababa have been consistent over recent years, rising steadily. They were approximately twice the value of the African Average in 2015. Given the existing level of unsatisfied demand, the new supply is not likely to affect the long term occupancy, and the new branded hotel will push the average rate up, positively impacting the RevPAR. Therefore, the value should be sustainable.

The substantial amount of rooms coming into Addis Ababa impacted the occupancy and rate levels in the capital in 2016. Whilst the demand grew by 8%, occupancy grew by only 4 points and the average rate barely followed inflation. However, values reached a peak at US$356,000 per room, proving the investors’ confidence and the potential of the market to grow significantly.

For detailed analysis visit http://hvi.hvs.com/market/africa/Ethiopia_-_Addis_Ababa

african hotel valuation index Hotel Valuation Index: Africa Ghana 2017 HVS Africa 3

The concentration of Ghana’s international tourist arrivals still revolves around the nation’s capital city Accra, and the mining and agriculture regional destinations. However, there is growing demand for hotels in Ghana’s second and third tier markets, with many players taking note of the massive potential.

Stakeholders such as hotel operators, investors, developers and the government sectors are closely following the new investments ‘hot spots’ of Ghana. Hotel chains such as Hilton, Moevenpick Hotels & Resorts, IBIS Styles, InterContinental Hotels Group, Marriott International, Golden Tulip, as well as Ghana’s domestic hotel groups such as Fiesta Hospitality Group and African Regent have indicated their intentions of strengthening the presence of their economy to mid-scale brands in the market.

Overall, Accra’s tourism industry can expect strong long-term potential, bolstered by rising demand for international, domestic and regional travel.

Future additions to the current supply of hotels will continue to exert some pressure on values. With the recent launch of the Kempinski Accra and the Ibis Styles properties values have fallen slightly in US$ terms, although at a slower rate than previous years.

Due to a substantial amount of supply coming into the market, the level of occupancy dropped by 2 points in 2016 and the average rate experienced slow growth below inflationary levels. However, the opening of branded hotels will help increase the average rate. Poor currency performance leads to a 3.4% drop in values, down to US$218,000 which is the weakest year out of the past five years.

For detailed analysis visit http://hvi.hvs.com/market/africa/Ghana_-_Accra

african hotel valuation index Hotel Valuation Index: Africa Kenya 2017 HVS Africa 3

Although the prospect of presidential elections in Kenya during 2017 may have a negative effect on hotels’ performance, the visit of the President of the United States, Barack Obama, and his Holiness the Pope led to an increase in interest for the country.

Nairobi’s hotel market presents a mixed picture. While non-branded hotels are struggling and the market performance is down (overall REVPAR down by 6.2%), the international hotel groups continue to see Kenya as a lucrative market for expansion. 2016 – 2018 will see a massive increase in the supply of branded hotels offering international standards.

Concurrently, Kenya’s hotel market offers significant investment opportunities owing to its position of the regional hub for leisure tourism, finance, government, and commerce.  Foreign investment continues to flow into Kenya, the World Travel and Tourism Council forecast a 5.2% growth in capital investment per annum until 2025. The huge increase of new supply results in a fall in RevPAR.  As a result, hotels’ values in Nairobi were down 4.8% in 2015. Room supply continues to be a challenge and local demand in Nairobi is now as important as international. As a result, rooms demand is weaker, and that has a negative impact on the overall hotels’ profitability. Increased confidence from international travelers along with the growing supply of international brands should boost hotels’ performance in the market and therefore hotel values.

With the improvement of the security situation and the lifting of travel warnings, the Nairobi hotel’s market should gradually recover. By ensuring a peaceful presidential election, the country would regain the international community confidence, and that’s all that is needed. The values dropped by 6.4% in 2016, accounting for a massive amount of new supply that impacted the level of occupancy.  However, HVS is confident that strong economic growth combined with the introduction of international brands into the market and a steady growth in demand will allow Nairobi to experience a significant increase in room values when the excess of supply is absorbed.

For detailed analysis visit http://hvi.hvs.com/market/africa/Kenya_-_Nairobi

african hotel valuation index Hotel Valuation Index: Africa Mauritius HVS Africa

With blue waters and wonderful climate, Mauritius is one of the dream tourist destinations on the Indian Ocean.

Mauritius registered 1,150,000 tourist arrivals in 2015, which translates into an 11% increase from 2014. South African Airways has further strengthened its routes to Mauritius due to growing demand – both from the continent and internationally.

Mauritius recorded double-digit increases in occupancy although in US$ terms RevPAR was down around 25%, in local currency, there was an impressive 12% increase.  The long term future for the island is positive with the government growing the economy in different sectors, all of which will need hotel accommodation. In addition, increased airlift direct from Europe should sustain demand for the resorts.  Announced new hotels include Park Inn by Radisson in Quatre Bornes, the new commercial hub of Mauritius.

Mauritius is a mature and established market that does not need to prove itself anymore. Tourists displaced by terrorism are likely to visit Mauritius. It will suffer from the rising competitiveness of other peaceful and sunny destinations (Cape Verde, Seychelles, etc). The values are expected to drop by 0.5% in Mauritian Rupees terms but will be stable in US dollars terms although far below the peak level reached in 2016.

For detailed analysis visit http://hvi.hvs.com/market/africa/Mauritius

african hotel valuation index Hotel Valuation Index: Africa Morocco HVS Africa

Morocco has been one of the better performing political and economic countries in the North African region.  According to Trading Economics, Morocco’s GDP grew from a paltry 1.8% in January 2015 to a respectable 4.5% at the end of the year. This stellar performance can be attributed to a stable economic environment and an established tourism industry. The WTTC reported Morocco’s tourism industry contributed 7.7% to the country’s GDP in 2015 and is projected to grow by 4% between 2016 and 2026.

Casablanca

Casablanca, on the other hand, has also seen a drop in performance, albeit more marginal than for Marrakech. Occupancy fell slightly and ADR was flat in local currency terms.

Casablanca may not experience the same recovery situation. The fear of terrorist attacks combined with economic uncertainty and the lack of attractive new supply will push the occupancy and rates down, producing a 6.9% drop in REVPAR. Yet, the additional income from the various in-house F&B facilities will help keep the values at a stable level of US$135,000 per room, although still lower than the pre-crisis level. The 186-room Four Seasons Hotel Casablanca has opened, marking Four Season Hotels and Resorts’ second property in Morocco.

For detailed analysis visit http://hvi.hvs.com/market/africa/Morocco_-_Casablanca

Marrakech

Marrakech had a tough year in 2015 with falls in both occupancy and ADR, resulting in a fall in RevPAR of 21%.  France remains a key market for the country as a whole so the increased terrorism in France and general nervousness surrounding North Africa meant many tourists chose not to travel to the country.

Morocco presents a mixed picture for 2016. Holidaymakers are coming back to Marrakech but the political push leads to economic nervousness and uncertainty. Marrakech should see a drop of occupancy owing to the amount of supply entering the market at a bad time for tourism. Luckily, the introduction of new branded four-star hotels may boost the average rates up and the security situation should encourage the clients to stay in the hotels extensively and thus increase F&B facilities revenue. This will trigger an increase of 10.3% in values in Moroccan Dirham. However, due to the currency devaluation following the economic uncertainty in the country, the values per room should drop by 7.6% in US dollars terms.

For detailed analysis visit http://hvi.hvs.com/market/africa/Morocco_-_Marrakech

african hotel valuation index Hotel Valuation Index: Africa Namibia HVS Africa

Namibia’s economy is integrally linked to that of South Africa and the rest of Southern Africa. Based on this consideration, the same headwinds that are faced by South Africa will have an impact on the Namibian economy, with low growth prospects being the order of business. Sluggish global demand and low prices for its key commodities exports will continue for the foreseeable future.

The outlook for tourism in Namibia remains bright, as it is boosted by incredible natural attractions. The government is actively involved in supporting and marketing the country to source markets through several international offices. The Department of Environment and Tourism coordinates tourism legislation and is supported by such bodies as Namibian Tourism Board, the Federation of Namibia Tourism Association, Hosea Kutako International Airport, Ministry of Home Affairs and Immigration. Hotel performance in Windhoek broke with a three-year growing trend in 2015 with a drop in occupancy, although it remains well ahead of historic levels. There was an impressive 8% growth in ADR in local currency. Hilton Worldwide has announced the signing of a management agreement with Out of Africa Hospitality to open a mid-market Hilton Garden Inn hotel in Windhoek, Namibia. The new property will open adjacent to the existing Hilton Windhoek in 2017. In US$ hotel values remain strong, although the trend has fallen due to the currency fluctuation. After a slow start to the year, Windhoek experienced a rebound in tourism in 2016. Occupancy reverted back to previous level, close to 70%, with an increase in average rate in line with the high inflationary level in the country. REVPAR and hotel values increased by 12.9% in Namibian dollars terms.

For detailed analysis visit http://hvi.hvs.com/market/africa/Namibia_-_Windhoek

african hotel valuation index Hotel Valuation Index: Africa Nigeria HVS Africa 5

Nigeria is one of the countries that were most adversely affected by the commodities and currency crises. The country has not reported a single case of Ebola since the crisis was declared over, however, Boko Haram has not yet been brought under complete control.

Abuja

Total international tourist arrivals in 2015 did not exceed 2014 levels, however, Nigeria has a larger domestic tourism market.Abuja hotels saw an increase in occupancy in 2015 despite the Boko Haram insurgency. Average room rate did not perform as well with a substantial decrease from $325.00 to $275.00.  Like Lagos, this is due in large part to the lack of international guests and an increase in local guests. Many new hotels are planned for Abuja over the next five years, which illustrates the confidence in which the market is held for the longer term. Accordingly, both Lagos and Abuja experienced reduced hotel values, however, these reductions were less severe than 2014.

Abuja is struggling to regain the confidence of tourists and investors. The fall in prices of gas and oil slowed the economy down in 2016, security is a massive concern for travelers and the accessibility to both cities is not improving. The level of demand and occupancy is expected to be down. Hence, Abuja will see a drop in values of 2.1%, suffering from a massive drop in occupancy. The improvement of the security situation and the economic recovery will partly condition the future of the hotels’ investment playground in Nigeria.

For detailed analysis visit http://hvi.hvs.com/market/africa/Nigeria_-_Abuja

Lagos

In 2015 Lagos experienced an increase in occupancy compared to 2014 although below historic levels. Unfortunately, the change in focus to domestic travelers has resulted in a sharp fall in ADR. STR analysts cite Boko Haram conflicts in the country as well as uncertainty during the Nigerian general elections and low oil prices as negative factors contributing to Lagos’ overall performance.

The long term remains positive with Carlson Rezidor announcing the signing of its first Quorvus Collection in Africa: the 5-star, 244-room luxury Emerald Grand Hotel & Spa in Lagos, Nigeria.

Lagos is struggling to regain the confidence of tourists and investors. The fall in prices of gas and oil slowed the economy down in 2016, security is a massive concern for travelers and the accessibility to both cities is not improving. The level of demand and occupancy is expected to be down, although Lagos should be less impacted owing to its position as capital. The hotels’ value in Lagos is expected to rise by 2.5% thanks to a rise in average rate and REVPAR.The improvement of the security situation and the economic recovery will partly condition the future of the hotels’ investment playground in Nigeria.

For detailed analysis visit http://hvi.hvs.com/market/africa/Nigeria_-_Lagos

african hotel valuation index Hotel Valuation Index: Africa Seychelles HVS Africa 5

With blue waters and wonderful climate, the Seychelles is one of the dream tourist destinations on the Indian Ocean. Seychelles has seen much political turmoil after it earned its independence from Britain. However, since a political coup d’état took place in the mid-1980s, the country has not looked back.

Seychelles has won a tourism attraction award, the Most Scenic Holiday award at the International Travel Expo (ITE). Besides marketing aggressively in the Indian Ocean countries such as India, Dubai, UAE and many others, Seychelles is achieving success in such western countries as Brazil and others in South America.

Hotel trading performance in 2015 was encouraging with stable occupancy and growth in RevPAR.  This, despite the islands having to secure new sources of business in recent years and now focusing more on the Asian markets.  HNN has shared the encouraging view that “Chinese travelers are arriving in larger numbers; the island enjoys some of the highest room rates in the world; more than 2% of arrivals come via private plane”

The Seychelles hotel industry has seen an increase in hotel values of 4.6% in 2015. 2016 was a good year for the Seychelles hotel industry; values grew by 8.2% owing to a 5% growth in demand and a 3% growth in rates.

The archipelago remains a luxury destination that has been able to re-invent itself and open up to new source markets along the path. It will definitely benefit from the economic growth of Sub-Saharan countries. The value per room will reach its peak since 2011, at US$538,000.

For detailed analysis visit http://hvi.hvs.com/market/africa/Seychelles

african hotel valuation index Hotel Valuation Index: Africa South Africa HVS Africa

South African Tourism, the marketing wing of the government’s Department of Tourism, continues to perform an important function of keeping the country top of mind when it comes to holidaymakers and business travelers.  The Home Affairs Department has eased the new entry visa regulations that had such a negative impact on visitor numbers in 2015. The currency exchange rate has had a positive impact on tourism numbers and these are expected to rise even further.  Brexit raises fresh concerns for the tourism market in South Africa, given the large number of British tourists who visit the country.  Uncertainty over their economy at home and the weakening of Sterling may deter many from long haul trips.

Cape Town

Cape Town saw a small dip in occupancy to 66%, but ADR (in US$) remained steady, despite the weakening of the Rand against the US$. In local currency, there was a 30% growth in ADR. This represents four consecutive years of strong performance, proving the oversupply is fully absorbed.  This is further illustrated by Tsogo Sun Group starting construction on a 500-room hotel complex comprising three brands in Cape Town.  There is a planned development at the Capetonian Hotel in Heerengracht, and the Gorgeous George Hotel and Bar development being constructed in St Georges Mall. All these hotels are located in the central business district.

Also benefitting from the currency exchange rate, the Cape Town hotel market will keep performing well in 2016. The REVPAR will increase by 6.7% thanks to a peak in occupancy and a strong rate growth. Values will reach their highest level at US$167,000. Victim of its own success, Cape Town will need to deal with an increasing amount of supply coming into the market in the next few years which might affect hotels’ performance and value until this oversupply is absorbed.

For detailed analysis visit http://hvi.hvs.com/market/africa/South_Africa_-_Cape_Town

Durban

Durban is the only Commonwealth country city that agreed to play host to the 2022 Commonwealth Games. Preparations have started with the announcement of many commercial projects. Durban hotel performance was more or less in line with that of the other two South African cities we are covering with growth in both occupancy and ADR.

Hotel values in South Africa rose impressively in 2015 in Rand terms, due to a steady increase in revenue per available room. However, in dollar terms, the country has not done so well, with a 16% drop in value for Johannesburg and Durban in 2015. Cape Town bucked the trend with only a marginal decrease in US$ terms. This performance is consistent with the currency crisis that was evident throughout all the emerging market economies.

Durban is still a growing market with strong occupancy growth combined with a 12% increase in ADR in 2016 will lead to an 18.7% REVPAR increase. With a low amount of supply coming in and a growing demand, the hotels’ performance is expected to keep growing at a steady pace. In line with the two big other South African cities, Durban benefit from the exchange rate and the increase in value is 29% in 2016.

For detailed analysis visit http://hvi.hvs.com/market/africa/South_Africa_-_Durban

Johannesburg

Johannesburg enjoyed the highest level of occupancy for at least six years and strong ADR performance, with RevPAR growing by 16% in local currency.  Unfortunately, the performance of the Rand against the US$ masks this strong growth.

Marriott has announced plans to construct a flagship hotel at the Melrose Arch, which is a popular mixed-use development providing a live, work and play environment outside the central business district.

Johannesburg has seen a peaceful transition of power in 2016 that helps to regain corporate and investor’s confidence. The hotel industry in Johannesburg should benefit from the advantageous exchange rate of the Rand. Hotel’s performance is expected to show positive trends and hotel values would rise by 14.4% in Rand terms and 24.3% in US dollars.

For detailed analysis visit http://hvi.hvs.com/market/africa/South_Africa_-_Johannesburg

african hotel valuation index Hotel Valuation Index: Africa Tanzania HVS Africa

Landlocked Uganda has announced it will build a major pipeline to export its oil through Tanzania. This is seen as a major source of confidence in Tanzania’s stability and safety profile. From this major infrastructure investment, Tanzania can generate more FDI and capitalise on the benefits of a subsidized route for its own oil. Dar es Salaam saw a 12% increase in room supply in 2015, unsurprisingly occupancy fell significantly.  The 2015 elections will also have affected demand.

However, positively there was a substantial increase in ADR in local currency, pushing RevPAR up almost 7%.  A 20% fall in the value of the Shilling against the US$ results in a fall in value in the HVI, although it should be noted in local currency terms there was a noticeable increase in value. Any worsening of the security situation and accessibility are major threats for the future of Dar es Salaam hotel industry. Yet, corporate travelers and overnight tourists waiting to fly to more touristic destinations are coming in and international brands start entering the market. Although the additional supply will impact the occupancy level, the average rate will be boosted by a strong inflation and the introduction of four-star branded hotels in the city. The values are expected to grow by 4.1% in 2016, after three years of bad performance owing to the currency devaluation against the US dollar.

For detailed analysis visit http://hvi.hvs.com/market/africa/Tanzania_-_Dar_es_Salaam

african hotel valuation index Hotel Valuation Index: Africa Togo HVS Africa

327,000 visitors from far and wide enjoyed the wonders of Lome in 2013. With tourism contributing 3.1% to the GDP of the country, the tourism market remains underdeveloped. Most of the major infrastructures are inadequate and the roads’ network is deficient in the capital.

Togo has a limited and uneven hotel supply. In 2012, rated hotels represented 900 rooms and 6 units in Lome. Accor Hotels and Carlson Rezidor are the only international brands operating in the city. In addition to the international chains, Group Onomo and Grupo Prefaco opened 2 hotels in Lome in 2014. Most of the hotels in Togo are state owned, although it’s now changing as the government wants to sell them to private investors. The government does not invest in any refurbishment or renovations, and does not have any hospitality expertise, leaving the properties outdated and under-performing. The on-going process of decentralization should encourage private investors and boost the premium travel accommodation supply in the country.

However, behind this layer of negativity, Lome has a real potential to grow its tourism activity. The level of occupancy had been stable since 2011, showing a rebound in 2015. ADR and REVPAR have been significantly up reaching a peak of +18.2% in REVPAR last year, boosted by the newly opened international hotels attracting demand from international travelers. Hotel values have thus experienced positive and encouraging trends, with double-digit growth over the two last years.

Investors are increasingly considering Togo for investment. The inflow of Foreign Direct Investment increased by 61% in 2013 and 49% in 2014. Despite overall positive trends, Lome still needs to address key challenges to be able to develop. In addition to the poor infrastructure, hotels in Lome tend to be overpriced, compared to the product offering and airline fares are dissuasive for travelers.

Although Lome faces some challenges in growing the tourism market, it offers economic and political stability. The city is expected to see positive trends in 2016. The opening of the Radisson Blu will trigger induced demand and help in catching the tourists and investors’ interest. Thanks to the low amount of supply, mid-size conferences such as AHIF (June 2016) can have a significant impact on the occupancy level. Hotels’ values are expected to rise by 8.2% in 2016, reaching a peak value of US$125,000.

For detailed analysis visit http://hvi.hvs.com/market/africa/Togo_-_Lome

african hotel valuation index Hotel Valuation Index: Africa Zambia HVS Africa

The copper mining industry in Zambia has impacted the economy of Zambia in the same way other emerging markets whose economies are supported by commodities. As an alternative strategy at maintaining economic growth, Zambian authorities are looking at the tourism industry. Initiatives such as the Zim-Zam UniVisa and the eVisa are targeted at increasing tourist arrival figures by simplifying movement across African countries

The Zambian Investment Agency expressed optimism that the country was able to capture the targeted 1 million tourist arrivals in 2015. According to the Zambia Tourism Board (ZTB), Zambia received more than 946,000 tourists in 2014, Zambia Airports Corporation Limited reported 1.36 million arrivals in 2012, with international visitors accounting for 1.14 million, illustrating current levels are significantly below historic numbers. The Chinese are still regarded as a prime source of tourists into Zambia and will continue to be targeted.

Performance of hotels in Lusaka was relatively stable in 2015 with a marginal increase in occupancy and a small drop in room rate.  As a result hotel values in Lusaka fell only slightly in 2015 (-2.6%), compared to a massive drop in 2014 (-12.4%). Companies clearly view this as a short term problem as Hilton Worldwide has announced the development of a brand new Hilton Garden Inn which is targeted to open in 2017 and Quantum Global purchased the Intercontinental Hotel Lusaka from Kingdom Hotel Investments.

Benefitting from a stable amount of hotel supply, Lusaka is expected to see the hotels’ occupancy and average rate reasonably grow. The sale of the Intercontinental in 2016 demonstrated investors’ confidence and boosts values up to US$142,000, representing a 6.8% growth against 2015.

For detailed analysis visit http://hvi.hvs.com/market/africa/Zambia_-_Lusaka

african hotel valuation index Hotel Valuation Index: Africa Zimbabwe HVS Africa

Known as “a world of wonders” in Southern Africa, Zimbabwe welcomes more than two million tourists a year, Although tourism contributes 10.4% to the GDP of the country, the tourism market remains underdeveloped. Most of the major infrastructures are outdated and roads need to be upgraded.  Political unrest and violent strikes shake the country and many Zimbabweans have left their homeland. Hotel supply has not grown for the past five years and is mostly made of local unbranded properties that struggle to adapt to the needs of international tourists. Harare lacks international hotel brands which would bring quality and expertise to the current tourism landscape. However, the country has a real potential to grow its tourism activity. The level of occupancy has been increasing since 2014, proving a rebound in demand from international tourists. While ADR and REVPAR are down, owing to the competitiveness of bordering countries, the picture may change quickly. Indeed, global hospitality brands have started showing interest in the nation. Carlson Rezidor recently announced the opening of a Radisson Blu Hotel in Harare in 2019, and it will certainly encourage competitive brands to enter the market.

Investors are increasingly considering Zimbabwe for investment. Capital investments are expected to rise by 4.8% per year over the next ten years. China is being a precious ally: President Xi Jinping confirmed multi-billion investments in energy and infrastructure and the cancellation of US$40 million in debt in exchange of the yuan becoming Zimbabwe’s international currency. This should push the number of business tourists from China in need for a hotel room. The government will need to tackle significant challenges in the next few years to be able to take advantage of this increasing demand, get the ADR back to the previous level and boost hotels’ values on the market. Harare will be significantly impacted by the political and economic crisis in 2016. The demand goes primarily to Livingstone and the Victoria Falls, but the corporate guests are not keen to visit Harare at the moment bringing occupancy down. The 6% deflation significantly impacts the average rate. Hotels’ values are expected to drop to their lowest level since 2010, at US$104,000, representing a 17.6% decrease.

For detailed analysis visit http://hvi.hvs.com/market/africa/Zimbabwe_-_Harare