By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE) – Africa’s hospitality industry is expected to grow further by 2018 according to a report released Thursday by PricewaterhouseCoopers LLP (PwC).
The report which focused on Nigeria, South Africa, Mauritius and Kenya according to Nikki Forster, PwC Leader of Hospitality and Gaming, although South Africa’s economy has weakened, growth in international travel and tourism and rising room rates have bolstered the hospitality sector.
The PwC’s 4th edition of the ‘Hospitality Outlook: 2014-2018’ projects that by the year 2018 the overall occupancy rate across all sectors in South Africa will increase, rising to an estimated 58.4%. Total room revenue is expected to reach R28.7 billion in 2018, a 10.7% compound annual increase from 2013.
“Occupancy rates are expected to increase for hotels over the next five years, overtaking guest houses, bush lodges and guest farms to again become the leading category,” says Forster. Occupancy rates for hotels are projected to increase from 58.9% in 2013 to 71.1% in 2018,” the report said.
According to PwC, accommodation sectors in South Africa consist of hotels, guest houses and guest farms, game lodges, caravan sites, camping sites and other overnight accommodation; but for the first time the report includes a detailed analysis of the cruise industry in South Africa.
“One of the most significant developments in 2013 in the South African hospitality industry was the rise in average room rates, which increased 8.4%, well above the 5.9% rate of inflation,” Forster said.
Forster affirmed that despite the recent economic uncertainty, the total number of foreign overnight visitors to South Africa rose 3.9% in 2013, down from the 10.2% increase in 2012, “but still reflecting continued growth in foreign travel to South Africa,” PwC Leader of Hospitality and Gaming said.
He further affirmed that foreign travel to South Africa was boosted in early 2013 by the African Cup of Nations football tournament and in December following the death of the late President Nelson Mandela, which led to an increase in the number of visitors to Robben Island where he spent many years in jail.
“The continued depreciation of the Rand is also credited with contributing to the growth in foreign tourism by making South Africa a less expensive country to visit and South Africans are also tightening their belts when it comes to luxury holidays abroad and turning to local travel as an alternative. The total number of travellers in South Africa is projected to reach 17.6 million, he said.
Forster said in 2013 overall spending on rooms in South Africa in all categories rose 14% to R17.3 billion, reflecting an increase in stay unit nights and an 8.4% rise in the average room rate.
On the part of Nigeria, the PwC report says that Nigeria’s booming economy is buoyed in part by regional and international investment. “Hotel room revenue rose 59% between 2009 and 2013. Conversely hotel room revenue in Mauritius decreased by 8.7% in 2013 but is projected to grow at 4.6% compounded annually to 2018. Kenya’s hotel market declined during the past two years, largely due to terrorist concerns,” the report said.
Outlook of the four (4) countries in review starting with South Africa, overall room capacity would increase at a 1.3% compound annual rate to 123 400 in 2018 from 115 700 in 2013.
Similarly, guest houses are expected to be the fastest-growing category in respect of the availability of rooms averaging 3.7% compounded annually, with slower growth in other areas. “Stay unit nights for hotels rose 4.8% in 2013 whereas guest houses and guest farms fell 4.5%. The overall occupancy rate across all sectors rose to 52.6% in 2013. Although guest houses/ guest farms had the highest occupancy rate at 60.5%, it was the only category to show a decline in 2013, having posted an occupancy rate of 65.3% in 2012,” the PwC report affirmed.
Hotels in South Africa which accounted for 71% of total accommodation revenue in 2013 is expected to rise to 73% by 2018.
For Nigeria the hotel market grew 9% in 2013, which was the smallest gain since 2010 according to the report. It said stay unit nights increased 6.3% in 2013 and have grown faster than room availability over the past three years. Average room rates have grown slowly in the last two years, rising by only 2.5% in 2013.
The report says the number of hotel rooms is expected to triple during the next five years, rising from 8 400 in 2013 to 24 000 in 2018. “Overall hotel room revenue is also anticipated to expand at a 22.6% compound annual rate to $1.1 billion (R12.1 billion) in 2018 from $413 million (R4.4 billion) in 2013,” PwC said.
On the part of Mauritius the average hotel room costs €170 (R2 492); 2.7 times higher than average rates in South Africa and 28% higher than South Africa’s average five-star room rate. “Due to the number of renovations and projects taking place in the industry, the number of available hotel rooms is expected to increase at a 2.9% compound annual rate to 14 250 in 2018. The average occupancy rate will edge down from 63.3% in 2013 to 61.5% in 2018,” the report said.
While Kenya’s hotel market declined during the past two (2) years, falling 6.6% in 2012 and an additional 2.6% in 2013. “Concerns about terrorism led several countries including the US and the UK, to issue travel alerts that discouraged people from visiting Kenya,” PwC said.
The report said the number of available rooms in Kenya is however projected to increase from 17 500 in 2013 to 19 400 in 2018 with an increase in the average room rate from $155 (R1 641) in 2013 to $163 (R1 726) in 2018. “Total room revenue is expected to expand by 2.5% compounded annually, rising to $668 million (R7.1 billion) in 2018 from $589 million (R6.2 billion) in 2013,” the report said.
“Growth in travel and tourism is expected to fuel growth in the accommodation industry across the African continent during the next five years,” Forster said.
