Emerging markets: Spotlight on Africa
Historically, hotel investment in Africa has largely been confined to South Africa and the leisure tourism destinations on the continent’s north coast, namely Morocco, Algeria, Tunisia and Egypt. However, several other African countries have recently experienced an increase in hotel investment activity, and the continent is slowly emerging from the shadows of Brazil, Russia, India and China (BRIC) as a target market for international hotel developers and investors. In particular, the coastal regions of Sub-Saharan Africa currently stand out as a focal point in Africa’s hotel investment landscape.
As investors stream to Sub-Saharan Africa in search of natural resources, the region has become the second fastest-growing economic region in the world, reports the World Bank. Hotel development has followed economic growth, as Sub-Saharan Africa saw a 54% year-on-year increase in the number of hotel developments in 2012. Nigeria, one of the world’s top ten petroleum exporting countries, has become the hotspot in the region, with 26 hotels currently under construction and a further 17 being planned in 2012 alone. Other Sub-Saharan countries with abundant natural resources, such as Ghana and Gabon, are also seeing a considerable increase in hotel investment. At this stage in the economic development cycle, hotel development activity has generally appeared to follow growth in activity related to the regions natural resources; given this trend, it is likely that a surge in hotel investments in resource rich countries, such as Mozambique and Angola, will follow.
Nonetheless, South Africa has experienced the greatest hotel investment activity on the continent, accounting for approximately 45.0% of the total annual transaction volume in Africa over the past six years. However, the hotel market has suffered from over-supply since the FIFA Football World Cup in 2010. While average occupancy remained stable at around 55%, ADR decreased by...