Salient to Investors:
Africa’s growing middle class and rising travel is fueling the fastest pace of hotel development in the world. Africa is buoyed by increasing trade with countries including China and rising demand for services such as lodging.
The Economist Intelligence Unit says over half of African countries will post GDP of 5 percent annually through 2016. 49 African cities have populations of over 1 million, 5 over 7 million.
Trevor Ward at W Hospitality said:
- IMF data shows urbanization in Africa is driven by one of the world’s youngest populations – 40 percent live in urban centers versus 30 percent in India.
- Growth in Africa is most dramatic in sub-Saharan Africa.
- People focus on the the wars and corruption in Africa, but there is little opportunity left in more-developed markets like Europe and the US for new hotel developments.
- Limited competition and low labor costs drive lodging profitability in Africa.
- Nigeria will overtake South Africa this decade as the largest economy on the continent.
- Not all African countries are growing at the same rate, with a lack of economic activity or political instability in some areas.
The CIA says the median age in Ethiopia and Nigeria is 18, versus 37 in the US and almost 46 in Japan and Germany.
STR says planned hotels are up 8.5 percent in the Asia-Pacific region and 4 percent in Europe.
The IMF says 7 of the 10 fastest-growing countries in the next 5 years will be in Africa, whose average growth will outpace Asia’s.
Starwood Hotels’ average room rates in Africa and the Middle East were $209.87, and revpar was $136.69, in Q4, the highest among the its 5 global regions.
“You have 54 countries, and the situations in each can vary greatly,” Ward said. “You’ve got so many small countries, land-locked countries with few natural resources and no access to any ports. The demand there will never be as great as in coastal areas or resource-rich countries.”
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