After actualizing a hefty 38% of anticipated openings in 2024, early
2025 shows promise with a 13% increase in deals signed, according to W
Hospitality Group.
AFRICA – New development funding in Africa remains expensive
and short term, if not scarce, limiting growth on the continent, according to a
new report from Lagos, Nigeria-based W Hospitality Group and Hotel Partners
Africa.
W Hospitality Managing Director Trevor Ward wrote this week that the
African hotel pipeline has recorded a 13% increase in deals signed between the
chains and developers (some chains included in the analysis are
owner-operators) in early 2025 compared to the beginning of 2024. He added that
much needs to be done to convert the deals to openings.
“There was
significantly greater activity in Africa last year, both in deal-making and in
properties opening – but we do need more,” Ward told Hotel Investment Today. “The development pipeline
averages about 10 per country on the continent, and the opening of hotels and
resorts last year averaged just over one per country. Both metrics are
about one-tenth of global averages.
“We’re
getting there, the number of hotels and resorts that opened in 2024 was double
the previous year’s figure, and I think that could double again this year.”
2024 pipeline data
For all of 2024, the report said 59 hotels or resorts with
9,559 keys opened in 21 African countries, while 41 countries on the continent
have development pipelines. The vast majority of the African development
pipeline continues to be new development.
Of the 21 African countries opening new properties, curiously Egypt lagged behind, despite its leading position every year in the pipeline charts. In 2024, Egypt had 143 hotels and resorts in the pipe (25% of Africa’s pipeline), but openings in the country were only 5% of the total.
W Hospitality Group
Looking closer at 2024 data, Radisson Hotel Group topped the
list of operators opening (8 hotels, 1,540 keys) and signing hotels in Africa. Marriott
International came next with 11 hotels but only 1,524 keys. Accor, TUI Hotels
& Resorts and Hyatt Hotels Corp. all passed the 1,000 keys mark.
From a property size perspective, Jumeirah opened a 1-key
resort on Shungimbili Island in Tanzania’s Mafia Archipelago. It actually has
seven accommodations throughout the “whole house” resort that must be booked
together. ENVI Lodges entered the African market for the first time in 2024
with an 11-unit lodge in the Serengeti, Tanzania. TUI Hotels & Resorts is
at the other end of the scale, opening a 474-key TUI BLUE Manar resort in
Hammamet, Tunisia.
Of the 21 countries opening new properties, Ward said, curiously
Egypt lagged behind, despite its leading position every year in the pipeline
charts. In 2024, Egypt had 143 hotels and resorts in the pipe (25% of Africa’s
pipeline), but openings in the country were only 5% of the total.
In order of rooms opening, it was Morocco first, Kenya second
(mostly in Nairobi) and Tunisia third (much larger resorts). Nigeria, the
so-called giant of Africa which is third in the pipeline rankings (after
Morocco), also underperformed compared to its pipeline, with only two
properties opening there last year.
For those hotels that opened in 2024, the average length of
time from signing to opening was 4.4 years, with a range of 1 to 14 years. Of
the 59 that opened, 47 were signed five years ago or less.
Without knowing each project individually, Ward estimated
that about 12 of the openings (20%) were conversions from independent to
branded, or from one brand to another.
There were no brand portfolio deals in Africa that W
Hospitality identify. In fact, he said, there have been very few with Marriott
International’s acquisition of Protea and Starwood 10 years ago. Minor Hotels bought
into Sun International’s portfolio at about the same time, and Sun
International bid for Peermont.
It’s surely good to be optimistic about growth, but when one considers that (according to the data that the chains themselves provide) some 20% of those hotels that are due to open by the end of 2026 are not yet under construction, that optimism may be just a tad over-egged.
Trevor Ward
When W Hospitality compared the location of openings in
Africa last year with the pipeline in each region, it is evident that there
were far more openings (in percentage terms) in Southern Africa than the
region’s share of the pipeline. Kenya and Tanzania had seven openings each.
For North Africa, that difference is mainly Egypt, where
only three hotels opened last year, compared to 143 in the country’s pipeline.
It’s a relatively new pipeline, with an increase on last year of about one-
third, 34 additions.
W Hospitality also reports each year on the actualization
rate of the hotel chains’ hotel development pipeline. The peak figure was in
2019, when 75% of the anticipated openings actually materialized. The rate in
2023 was “particularly awful,” according to Ward, who couldn’t explain it away.
For 2024, the figure was above average at a 38% actualization rate.
Data show the chains are scheduled to open 304 hotels and
resorts this year and in 2026 in Africa, up by 100 properties on expectations
for 2024 and 2025, and three and a half times what actually opened in the last
two years. “It’s surely good to be optimistic about growth, but when one
considers that (according to the data that the chains themselves provide) some
20% of those hotels that are due to open by the end of 2026 are not yet under
construction, that optimism may be just a tad over-egged,” Ward wrote.
He added that if the chains achieve the Lodging Econometrics
openings figure of 13% of the pipeline, then the openings figure for 2025 would
be 75 properties, an actualization rate of 50%. “So, not so bad, and definitely
achievable,” Ward said.
In conclusion, Ward wrote, peculiar to Africa, in their
experience, is also the fact that a large number of deals are sponsored by
individuals who don’t have the wherewithal to actually deliver a completed
hotel or resort, and don’t understand the essential need for fast money flow
and fast decision-making abilities. He did add that developers in some regions
(Southern Africa and East Africa, for example) do seem to be better at it than
in others.
Geopolitical concerns
W Hospitality also considered geopolitical implications on
Africa’s pipeline and overall do not see a net positive.
Hospitality Consult Ltd. estimates that the travel and hospitality sector in Kenya could lose as much as $126 million in revenue this year due to the stoppage of funding from the U.S. to NGOs. For some hotels that’s 60% of their revenue.
W Hospitality Group
Ward referenced how U.S. President Trump has cancelled the
President’s Advisory Council on African Diaspora Engagement, distancing the
Oval Office from African-related affairs. “The African Diaspora is important
for Africa, for all sorts of reasons, not least being a source of capital for
new hotel and resort development on the continent,” he said.
Ward also said small markets on the continent are highly
exposed in terms of trade with the U.S. and sub-Saharan Africa is one of the
regions that are most reliant on aid from the U.S. As a result, the suspension
of USAID and other foreign aid initiatives, with some programs already
terminated, has already impacted hotels who rely on U.S. aid programs for some
of their business. Hospitality Consult Ltd. estimates that the travel and
hospitality sector in Kenya could lose as much as $126 million in revenue this
year due to the stoppage of funding from the U.S. to NGOs. For some hotels
that’s 60% of their revenue.
Ward continued that some African governments are already considering
converting the adverse impacts of policies emanating from the White House into
an opportunity to be more self-sufficient. “Travel and Tourism needs far more
attention from those governments, and that means giving the private sector a
helping hand to grow, in an enabling environment,” Ward wrote. “That creates
jobs, increases government’s income, improves health and education - and that’s
a virtuous circle.”