As a result, international players are lining up to get a slice of the booming industry. Radisson, Marriot, Best Western, Sheraton, Ramada, Hilton and Mövenpick are among the international brands that are now flocking to East Africa to open new facilities aiming to capitalise on the projected tourism growth.
A new report by audit firm PwC dubbed Hotels Outlook: 2019–2023 report shows that growth in tourism numbers coupled by governments’ efforts to promote MICE (meetings, incentives, conferences and exhibitions) infrastructure to attract more business tourists is driving the growth of the hotels industry.
“Increased room capacity, a strong economy, growth in tourism from India and China, and Tanzania’s appeal as an exotic destination will fuel growth over the next five years,” says the report.
If you are planning to invest in the hotel industry then this is the right time for you keeping all things constant. The report projects the hotel industry in Tanzania and Kenya to be among the fastest growing on the continent, with compound annual increases of 8.2% and 7.4% respectively.
After years of slow growth occasioned by scares of tax measures in Tanzania and terrorist threats and attacks, especially for Kenya, the two country’s respective industries are now witnessing a significant rebound.
In Tanzania, hotels earnings took a dip after the government introduced 18 per value added tax on tourism services in 2016 and a fixed rate concession fee in 2017 that saw a surge in the costs for travel agents and other travel packagers resulting in demand decline.
However, all that seems to be in the past now and the hospitality industry in Tanzania and Kenya expects steady growth, with the number of hotel rooms in Tanzania projected to increase by 2.4 per cent from 7,800 in 2018 to 8,800 in 2023.
Guest nights are expected to rise from 1.6 million in 2018 to 1.9 million in 2023—a 3.5 per cent compound annual increase—while the total room revenue will expand by 8.2 per cent to $329 million in 2023, from $222 million in 2018.
In Kenya, the number of available rooms is expected to increase from 20,100 in 2018 to 23,800 in 2023, a 3.4% rise.
Guest nights are expected to total 4.6 million in 2023, a 3.4% increase from 3.9 million in 2018, while total room revenue should expand by 7.4% to $731 million, from $511 million.
Nigeria is going to give the two a run for their money though
Kenya and Tanzania are not going to have it easy though and Africa’s most populous country, Nigeria, is going to give the two a run for their money.
During the next five years, Nigeria will be the fastest-growing market with a projected 12 per cent compound annual increase, according to Hotels Outlook: 2019–2023.
Mauritius is expected to grow at 5.7% and South Africa at 3.3%. In Nigeria, overall hotel room revenue is expected to reach $445 million in 2023 from $252 million in 2018, with guest nights rising at a 7.6 per cent compound annual rate to 2.6 million up from 1.8 million.
In South Africa, growth is expected to pick up in 2019 following a flat growth of 0.5 per cent in 2018 and is forecast to expand to $1.2 billion in 2023, up 3.3 per cent from $1 billion in 2018.
Hotel room revenue for South Africa, Nigeria, Mauritius, Kenya and Tanzania as a group is projected to increase at a 5.8% compound annual rate to $3.3 billion in 2023 from $2.4 billion in 2018.