Nairobi has been noted as one one of the hotel development hotspots as investors take advantage of the relative undersupply of international-grade hotels across Africa and the expected increase in demand for rooms, according to the Knight Frank Hotels Africa 2018 report.
The report goes further to explain how in recent times, Africa’s growing
hospitality market has seen increased levels of investment from Middle Eastern hospitality groups. While some investors
have been driven to diversify their
holdings due the slowdown in domestic
markets, others continue to be active in
both domestic and foreign markets.
be increased opportunities for investors
and developers to target the budget
and midscale hotel segments. Emerging
formats such as apartment hotels, which
are still in their infancy in most of Africa, are another potential target for investors.
As is the case across all property sectors,
the scarcity of investible hotel assets
presents a major challenge to global
investors seeking to enter African markets.
Nairobi is especially one of the hotspots for hotel property development as investors take advantage of the relative undersupply of international-grade hotels across most of Africa and the expected increase in demand for rooms.
The #KFHotelsAfrica 2018 report shows that Nairobi, Dar es Salaam, Zanzibar and Seychelles are the hotel development hotspots in Eastern Africa—accounting for 26% of pipeline projects in Africa. West Africa tops with 35%, followed by North Africa with 29%: https://t.co/grWPQ4H2Kg pic.twitter.com/CVW5kDEd9i
— Knight Frank Kenya (@KnightFrankKE) May 31, 2018
The Knight Frank Hotels Africa 2018 report continues to show that Nairobi, Dar es Salaam, Zanzibar and Seychelles are the hotel development hotspots in Eastern Africa—with the region accounting for 26% of pipeline projects in the continent. West Africa tops with 35% of hotel projects under construction, followed by North Africa with 29%.
Currently, Kenya sits fifth in the list of top 10 African countries with the highest number of chain and branded hotels—excluding lodges, safari camps, chalets and cruise-hotels—according to data compiled by Knight Frank Research for up to December 2017.
Ben Woodhams, Managing Director at Knight Frank Kenya, said: “Nairobi’s position as a major regional hub will be further reinforced by the growth of this sector in the city.”
Challenges
However, a key challenge for brands seeking to grow their African portfolios is the long construction times.
New hotel developments are
regularly subject to protracted delays,
and there is an ongoing disparity
between the stated pipelines of major
hotel groups in Africa and their ability
to open these projects on time. To circumvent this, some hotel groups are pursuing growth strategies that prioritise rebranding existing properties instead of building new ones.
“Across the continent, development activity is being driven primarily by the expansion plans of the larger multinational hotel groups. All of the major global players have multiple hotels under development across Africa, and several of them have made eye-catching announcements about their future African plans,” the report notes.
Travel to and within Africa has historically been hindered by poor air connections, but these are gradually improving and low-cost African airlines are emerging.
Over the long term, a growing number
of destinations ought to become more
accessible to international and intra-
African travellers, driving demand for
hotel rooms.
Major brands that that have announced Kenya expansion plans include Marriott International which will open at AVIC International’s building in Westlands, Nairobi, and Hilton Hotel, which will open at The Pinnacle in Upper Hill.
In addition to the well-known international hotel operators, several brands operating solely in Africa are actively growing their businesses. Examples include CityBlue, a chain owned by UAE investor Diar Capital, which has opened hotels in four East African countries and has signed pipeline deals in a further eight countries in East and West Africa.
