West African resurgence sees hotel boom

West Africa’s economy is expected to rebound in 2017 after two slow years, sparking a boom in hotel construction, it has been reported.

Commodity-based economies such as Nigeria are recovering from the fall in oil prices and oil production, while countries like Côte d’Ivoire, Mali, and Senegal have shown economic resilience and sustained growth.

The growth of the hotel sector is an important indicator of how well a market is developing its travel infrastructure, and the indicators for West Africa are mixed.

According to W Hospitality Group’s 2017 Hotel Chains Pipeline report, West Africa has a pipeline of 114 hotels and 20,790 rooms, accounting for 42% of the Sub-Saharan African hotel pipeline. However, of these hotel deals signed and planned, only approximately 9,875 rooms, or 48% have moved to construction. In addition, projects in the region have longer than average development periods at approximately six years, compared to the two- to three-year development program that is usually planned. Some of the reasons for these delays are high capital investment required, lack of access to adequate financing options, limited access to raw materials, high construction and material costs, a heavy reliance on importation, inadequate technical capacity to manage the development program, and other barriers to entry.

Of the hotel pipeline for West Africa, Nigeria contributes 49.6% or more than 10,000 hotel rooms (in 61 hotels). Nigeria is also the top market in Africa for planned rooms.

The other substantial markets in West Africa include Cape Verde with 11 hotels and 3,478 rooms, and Senegal with 14 hotels and 2,164 rooms. These three markets contribute a total of 15,955 hotel rooms, or 77% of the West African hotel pipeline.

Approximately 57% of the pipeline in these countries has moved to site, however some of these projects have been stalled for some time. In a country, like Nigeria, this can be significant. Forty per cent of Nigeria’s pipeline was signed between 2009 and 2014, and as the chart above illustrates, a large portion of these projects is still in the planning phase. In Senegal only approximately 44% of the deals signed have moved to site.

Hilton recently announced a plan to support the conversion and rebranding of 100 existing hotels through its Hilton Africa Growth Initiative, by committing US$ 50 million to supporting these conversions.

Commenting ahead of the conference, Mike Collini, vice president development Sub-Saharan Africa, Hilton, remarked on the opportunities presented by the inadequate hotel supply. He said: “to overcome this we are looking at rolling our focused service brands in key markets with a focus on our Hilton Garden Inn product. We are also pioneering the use of modular construction with a new Hilton Garden Inn in Accra, which is a fast and cost-effective build model for owners and developers.”

Andrew McLachlan, Carlson Rezidor’s senior vice president Africa & Indian Ocean for Development, said in a direct comment to Estate Intel: “Today we have 17 hotels open or under development in the region and in our new 5-year development strategy we have identified five Tier 1 Cities in West Africa (Lagos, Abuja, Accra, Abidjan and Dakar) where we see scaled growth opportunities…across the luxury to midscale hotel segment.”


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