North Africa dominates hotel development activity on the continent

Amid the challenges posed by the COVID-19 pandemic on Africa's travel and hotel operations, there are encouraging signs that hotel development activity is gradually rebounding. W Hospitality Group's latest estimation reveals that there are 447 hotels with 82,000 rooms under development across the continent, marking a 5% growth compared to the previous year. In a recent interview with CNBC Africa, Trevor White, the founder of W Hospitality Group, shed light on the current landscape of hotel development on the continent. Approximately 50% of the hotels in the pipeline are currently under construction, while the remainder consists of signed deals between management or branding companies and developers. However, White cautioned that not all signed deals may come to fruition as some projects may face delays or cancellation. White expressed cautious optimism regarding the realization of these projects in 2021. While preliminary data suggests that 99 hotels are scheduled to open this year, the actual execution rate in 2020 fell below 30%. White predicted that approximately half of the projected hotels may open this year, with the final outcome dependent on various factors affecting the hospitality industry. Egypt emerges as the leading country in terms of hotel development activity, boasting the largest pipeline of hotels with around 19,000 rooms. The North African nation's status as a popular tourism destination and a significant economy contributes to its appeal among investors. Following Egypt, Nigeria, Morocco, and Ethiopia also feature prominently in the top four countries driving hotel investments, collectively accounting for 80% of the total pipeline. In contrast, East Africa presents a mixed picture with Kenya and Ethiopia representing the region in the top 10 countries with significant hotel projects. While Kenya showcases potential for tourism growth and investment, White highlighted Tanzania as a promising market for future hotel developments, despite historical challenges in attracting investors. The conversation shifted to emerging markets such as Rwanda, where investment in the tourism sector has been on the rise. White acknowledged Rwanda's strides in attracting investments but noted the country's limited scale compared to larger African economies like Tanzania and Kenya. He emphasized that major urban cities with international airports are more likely to attract substantial hotel developments due to their scalability and market potential. Furthermore, White pointed out that 16 countries in Africa currently have no reported chain pipeline hotels, mainly due to their smaller economies and challenges in attracting investors. However, he underscored that circumstances can change rapidly, citing the example of Djibouti. Despite having no pipeline projects for several years, Djibouti recently made a significant leap in hotel development with four new deals totaling 444 rooms signed by prominent hotel chains such as Accor and Radisson. In conclusion, Africa's hotel development sector shows resilience and adaptability in the face of the ongoing pandemic. While challenges persist, the industry's gradual recovery and the emergence of new opportunities in previously untapped markets demonstrate a promising outlook for the future.