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Africa Hotel Development Ruined by COVID-19 outbreak

Africa Hotel Development Ruined by COVID-19

Counted an important and leading service facility for African tourism, Africa hotel development has been devastated by the outbreak of COVID-19 that affected Africa’s key tourist markets in Europe, the United States, Southeast Asia, and some African tourism business sources.

African hotel development had made a come-back growth at the start of 2020, with more than 78,000 rooms in 408 hotels in the pipeline, the twelfth annual survey by W Hospitality Group had indicated.

But the COVID-19 outbreak is now shattering the dreams of Africa’s hotel industry, said W Hospitality Group’s Managing Director, Trevor Ward.

“The growth of the chain’s presence in Africa has been a very positive story since 2009 when we started this analysis. It is quite clear from the numbers that the chains, the developers, the investors, and all of us at W Hospitality Group continue to believe in the opportunities that Africa presents in the hotel and tourism industry,” he added.

“However, our industry has been devastated by the impact of COVID-19, possibly more so than most other economic sectors, mainly because of the almost total shutdown of borders and of the aviation sector – no flights means no guests,” Ward said.

“With that background, we see a slowdown in pipeline growth in 2020, as we all get to grips with the new reality. With so many of the players locked down, fewer deals will be signed, and it is inevitable that some of the planned openings in 2020 will be delayed,” he added.

Ward said that other setbacks were observed due to closed or slower-paced construction sites, restrictions on funding, and a lack of market demand.

According to the latest data, there are 90 hotels with 17,000 rooms scheduled to open in 2020, but the estimate showed that at least half of these will be delayed, bringing the actualization rate down to no more than 40 percent.

This year’s African Hotel Chain Development Pipeline survey covers 35 international and regional hotel contributors across 54 countries in north and sub-Saharan Africa and in the Indian Ocean islands.

It reveals a 3.6 percent increase on the 2019 pipeline. Most encouraging was a record 68 chain hotels opening last year, fully 75 percent of those which were scheduled to open, with 11,000 rooms. That performance was substantially up from the 39 percent of those scheduled to open in 2018 actually doing so.

Accor performed particularly well; it opened 18 hotels last year with almost 3,500 rooms in its various brands, ranging from Ibis to Fairmont.

“We have to wait and see what will happen in the second half of 2020 and in 2021 as we emerge from lockdown and other restrictions. Tourism is such an important industry in Africa,” Ward said.

“Because of the direct and indirect jobs that it creates and sustains, as well as its strong foreign currency earnings, we are anxious to see hotels reopen and get back to contributing to the African growth story,” he noted.

Matthew Weihs, Managing Director of Bench Events, which is staging Africa Tomorrow, said: “Right now, we are facing the biggest recession in history. For those seeking to operate hotels, it is a dreadful time.”

However, for the savvy investors, this is actually a moment of opportunity, because hotels are a long-term investment, and one of the secrets of success is to spend money during the bottom of the economic cycle in order to capitalize on the upturn as soon as it comes.

“That’s one reason why I expect the networking sessions at Africa Tomorrow will be very busy and fruitful,” Weihs said.

As expected, Marriott, the world’s largest hotel chain, has the largest pipeline in Africa – 22 percent more hotels and 6 percent more rooms than second-placed Accor, but Accor has been catching up fast, signing 25 new deals last year, compared to Marriott’s 17 new projects.