Massive expansions on the cards - New Africa Hotels by numbers

2016-05-13 10:30 - Louzel Lombard
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Cape Town - The African continent, and especially sub-Saharan Africa, is like a gold mine for hotel investors.  

Growth in planned hotel rooms in sub-Saharan Africa increased with 42.1% in 2015. Angola leads the pack with 56 new hotel developments planned, including the AccorHotels deal for 50 hotels. 

But more than AccorHotels are tapping into the promising hotel market in Africa. 

Ibis Styles in fact, has emerged as the front-runner for the number of planned hotels in Africa, knocking back Hilton and Radisson Blu which for years have been locked in a contest for first and second place.

According to the annual Hotel Chain Development Pipeline Survey, from W Hospitality Group, Ibis Styles leads the top 10 brands list. 

It has 28 planned hotels, followed by Radisson Blu with 25, Mercure with 24 and Hilton slipping into fourth place with 16. Ibis Styles and Mercure’s first and third positions are due to AccorHotels mega-deal for 50 hotels in Angola. 

But while Ibis Styles leads on the number of planned hotels, the top ten rankings by number of rooms reveal a different picture. 

Radisson Blu leads this category with 5 693 planned rooms, Hilton is in second place with 4 851 and Ibis Styles comes in third with 3 822. 

The survey also shows that the hotels are expanding exponentially, most by 50% or more. 

This is because “investors are evidently becoming increasingly willing to back Africa’s success,” Matthew Weihs for Bench Events, a company that organises the Hotel Investment Forum (AHIF), says.  

The highest percentage increase in the hotel industry is seen in Rotana, but this is from a very low base.  

Overall, from the Top 10 Hotel chain development pipelines in Africa 2016, hotels are expected to expand 75% in total, meaning an addition of at least 16 323 new hotels rooms. 

Of the top 10 chains, seven have an average size per deal of more than 200 rooms, which means that the hotels going up aren’t small either. 

This is reflected in the whole survey as well, and not only in the top 10 hotel chains expanding in Africa. 

The average is 176 rooms per hotel – 230 in North Africa and 159 in sub-Saharan Africa.

The Top 10 list is, unfortunately, dominated by external hotels groups from mostly the US. 

But, this might change soon, as Newmark plans to tap into the market too. 

Although not yet listed the Top 10 developing hotels in Africa, Newmark hotels, reserves and lodges has announced they will be embarking on an aggressive growth plan on the African continent in 2016

A key strategic intervention for the group’s expansion is the establishment of Newmark’s first office outside South Africa in Lusaka and the creation of the Kaufela Collection in Zambia.

The Kaufela Collection has already signed three independent lodges, totalling to 100 rooms, and plans to add another 400 rooms by the end of 2016. Newmark is also currently taking on a new property in Zanzibar and a further 170-room business hotel in Lusaka.

Also Peermont Hotel Group announced it will be undertaking multi-million-rand hotel extensions and resort refurbishments in the upcoming months, including an additional 100 rooms added to the Peermont Metcourt at the Group’s flagship Emperors Palace resort in Johannesburg  and a 20-key extension to the Peermont Metcourt hotel at the Khoroni Hotel, Casino and Convention Resort in Thohoyandou, in Limpopo.

In the North West province, Sun City is currently undergoing a R1bn expansion, which will see 380 bedrooms at the Cabanas self-catering apartments at the resort refurbished. 

Earlier this year, the City of Cape Town also announced that they R1.6 billion will be invested in upgrading or building new hotels in the City.

Deals signed does not mean hotel rooms opened

2015 was a bumper year for deals being signed, as the number of planned hotel rooms on the continent soared to 64 000 in 365 hotels, up almost 30% on the previous year, according to figures from the annual W Hospitality Group Hotel Chain Development Pipeline Survey. 

But the plans don’t always manifest according to the paperwork. Between 2006 and 2013, 104 deals with 21 377 rooms were signed and should, technically, be open for business now. But for many reasons, most often a lack of finance, they are either still just on paper, or in some cases, remain unfinished. 

Take a look at the stats: 

While there is great promise in Africa, there is also much uncertainty.

Ten hotels with 2 840 rooms still have no opening date. In North Africa, countries such as Libya and Egypt have been hit by terrorism and political unrest, and this had delayed work on a number of projects. 

In the Middle East funding for projects in North Africa has also been affected by the oil price crash.

Despite this, over the next three years there will be 47 000 new rooms in 293 hotels and the expectation of much more to come, including deals that have already been made in the first quarter of 2016.

The 2016 survey will be discussed in detail at AHIF in Lomé, Togo on 21-22 June 2016, at the new flagship Radisson Blu Hotel du 2 Février. 

The second AHIF will take place on 2-4 October at the Radisson Blu Hotel & Convention Center, Kigali, Rwanda.  

The W Hospitality Group 2016 survey provides a comprehensive picture of hotel development across the continent - 36 hotel chains and 86 brands with more than 64 000 rooms in 365 hotels. 

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