Kenya, Tanzania & Mauritius Fastest Growing Hospitality Industries in Africa

The hospitality industries in Kenya, Tanzania, and Mauritius have been projected to be the next fastest growing, with compound annual increases of 9.6 percent, 9.1 percent, and 7.2 percent respectively.

This is according to the latest Hospitality Outlook projection by audit and financial advisory firm PricewaterhouseCoopers (PwC) which showed that Kenya was going to benefit from a rebound in tourism, new hotels, its growing prominence as an experience destination, infrastructure upgrades, and the expectation of political stability.

On the other hand, South Africa was projected to be the slowest-growing market, with a 5.6 percent compound annual increase in room revenue which was attributed to the water shortages that have been experienced in the country for the better part of 2018 thus leading to a drop in guest nights in Cape Town, offset by growth in overall tourism to South Africa.

A stronger global economy and an improving domestic economy are expected to lead to faster growth in guest nights and room revenue in subsequent years, stated the report.

ADR growth will be the principal driver, with a projected 4.1 percent compound annual increase. Guest nights will begin to expand again in 2019 but will average a relatively modest 1.4 percent compound annual increase through 2022.

Hotel room revenue for the five markets as a group will increase at a 7.4 percent compound annual rate to R50.5 billion in 2022 from R35.2 billion in 2017.

Africa’s hotel sector has showcased the potential for further growth over the next five years. An increase in the number of foreign and domestic travelers, as well as expansion in a number of hotel chains on the continent, reinforces the hotel sector’s untapped potential for business growth.

The hotels and tourism sectors in each of the countries in on the report have all shown signs of continued growth over the forecast period.

Tourism remains an important part of each economy, with continued investment in each country seeing additional hotel rooms coming online over the next five years.

Hotel room revenue for the five markets as a group will increase at a 7.4 percent compound annual rate to R50.5 billion in 2022, from R35.2 billion in 2017.

Overall room revenue in South Africa, Nigeria, Mauritius, Kenya, and Tanzania rose 2.7 percent in 2017, down from the 10.6% increase in 2016, as declines in Kenya and Tanzania offset double-digit increases in Nigeria and Mauritius. Room revenue in South Africa rose 4.6 percent.

Overall, room revenue in South Africa is expected to expand at a 5.6 percent compound annual rate to R21.8 billion in 2022.

The hotel markets in Nigeria and Mauritius continued to perform well in 2017, with both achieving double-digit growth, whereas Kenya and Tanzania had decreases in room revenue.

Hotel room revenue in Mauritius increased by 12.7 percent in 2017 and the country continues to experience growth in the number of foreign visitors.

Kenya experienced a drop in visitors following the national elections in August 2017, but recovery was already seen in December with an increase in visitor numbers resulting in 9.9 percent overall growth. However, this was not enough to boost overall room revenue, which showed a 13.5 percent decline in 2017.

Tanzania’s hotel room revenue amounted to US$206 million in 2017, a decline of 5.5 percent over 2016 due to a drop in guest nights.