Nigeria Tops Africa’s Hotel Market

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  • Nigeria Tops Africa’s Hotel Market

West Africa has a pipeline of 114 hotels and 20, 790 rooms, accounting for 42 per cent of sub-Saharan African hotel pipeline.

Of the hotel pipeline for West Africa, Nigeria contributes 49.6 per cent, or more than 10, 000 hotel rooms (in 61 hotels). Nigeria is also the top market in Africa for planned hotel rooms, W. Hospitality Group’s 2017 Hotel Chains Pipeline report, has shown.

According to the report, other substantial markets in West Africa include Cape Verde with 11 hotels and 3, 478 rooms, and Senegal with 14 hotels and 2, 164 rooms. These three markets contribute a total of 15, 955 hotel rooms, or 77 per cent of the West African hotel pipeline.

The report, seen at the weekend, showed that approximately 57 per cent of the pipeline in these countries have moved to site, adding however, that some of the projects have been stalled for some time. “In a country like Nigeria, this can be significant. For instance, 40 per cent of Nigeria’s pipeline was signed between 2009 and 2014, and a large portion of these projects is still in the “planning” phase,” it said.

The report said in Senegal, only approximately 44 per cent of the deals signed have moved to site. It also said although, the pipeline of hotels to the sub-region was encouraging and indicative of strong investor interest, the low completion rate of projects could be troubling for the development of the hotel sector.

It is also difficult for the hotel chains whose expansion plans in these markets rely on partnerships with local and foreign investors to develop these hotels. The report said that all the major global hotel chains have strong expansion plans to increase their operating presence on the continent, and in West Africa.

The report noted that West Africa has been at the heart of the continent’s growth and economic transformation in recent years. It added that despite the sharp slowdown experienced in 2016 and 2017, the region’s economy is expected to rebound in 2017 onwards.

The 2017 Hotel Chains Pipeline report said commodity-based economies like Nigeria are slowly recovering from the fall in oil prices and oil production, while countries like Côte d’Ivoire, Mali, and Senegal have shown economic resilience and sustained growth.

According to the report, as many of the countries continue to stabilise – politically and economically – the region will be better integrated from a local and international context. This increased integration, it said, raises the need for quality travel and accommodation infrastructure.

It noted that the growth of the hotel sector is an important indicator of how well a market is developing its travel infrastructure, and the indicators for West Africa are mixed. “West Africa has a pipeline of 114 hotels and 20, 790 rooms, accounting for 42 per cent of the Sub-Saharan African hotel pipeline,” the report stated.

However, of these hotel deals signed and planned, only approximately 9,875 rooms, or 48 per cent have moved to construction. In addition, projects in the region have longer than average development periods at approximately six years, compared to the two- to three-year development program that is usually planned.

The report identified some of the reasons for these delays to include high capital investment required, lack of access to adequate financing options, limited access to raw materials, high construction and material costs, a heavy reliance on importation, inadequate technical capacity to manage the development program, and other barriers to entry.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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