Nigeria’s Hotel Sector Projected to Sustain Expansion

Nigeria’s hotel sector as well as hotel sector in some other African countries have the potential for further growth over the next five years.

An increase in the number of foreign and domestic travellers, as well as an expansion in a number of hotel chains on the continent reinforces the hotel sector’s untapped potential for business growth.

These were some of the highlights from a new report that was released by PwC on Africa’s hotel sector.
PwC’s eighth edition of the, ‘Hotels outlook: 2018-2022’ includes information about hotel accommodation in South Africa, Nigeria, Mauritius, Kenya and Tanzania. The report projected that hotel room revenue for the five markets as a group will increase at a 7.4 per cent compound annual rate to R50.5 billion in 2022 from R35.2 billion in 2017.

For Nigeria, it predicted that the country was expected to be the fastest-growing country over the next five years. Owing to this, a number of new hotels had been scheduled to be opened during this time. Therefore, the report pointed out that continued improvement in the domestic economy will lead to faster growth in guest nights.

“The hotel markets in Nigeria and Mauritius continued to perform well in 2017 with both achieving double-digit growth whereas Kenya and Tanzania had decreases in room revenue.
“For the forecast period as a whole, the number of available rooms in Nigeria will rise from 9 700 in 2017 to 12 600 in 2022, a 5.4 per cent compound annual increase – still the largest expansion of any country in the report,” it stated.

Also, commenting on the report, Hospitality Industry Leader, PwC Southern Africa, Pietro Calicchio said, “says: “Tourism to the African continent has proven to be resilient in the face of economic and political uncertainty, impacts of droughts and other regulatory changes.
“The opportunities are aplenty for this industry to enjoy further growth albeit at a more modest pace. However, as we continue to see there are also a number of challenges facing each country.
“This is an industry that is reactive to the smallest change in political, regulatory, safety and sustainability matters.”

South African hotel room revenue was expected to expand to R21.8 billion in 2022, up 5.6 per cent, compounded annually, from R16.6 billion in 2017.
It stated that the growth in hotel rooms in South Africa, remained similar to that predicted in its 2017 report, with an additional 2 900 rooms to be added over the next five years.

It also forecast occupancy rates in the country to continue to grow over the forecast period and to reach 62.5 per cent in 2022.
After jumping 38 per cent in 2016, visitors from China to South Africa fell 17 per cent in 2017, according to the report.
Travellers from India rose a modest 2.7 per cent in 2017, well below the 21.7 per cent increase recorded in 2016.

Of African visitors, the largest number was from Zimbabwe at two million, followed by Lesotho at 1.8 million and Mozambique at 1.3 million.
According to PwC, Kenya, Tanzania and Mauritius should be the next fastest growing, with compound annual increases of 9.6 per cent, 9.1 per cent and 7.2 per cent respectively.

Hotel room revenue in Mauritius increased by 12.7 per cent in 2017 and the country continued to experience growth in the number of foreign visitors. Hotel room revenue was projected to grow at a 7.2 per cent compound annual rate to 2022.
“Tourism remains an important part of each economy. However, the smallest change or disruption can have a fundamental impact on the future growth of each market.
“It is therefore important that investors, hotel operators, tourism bodies and governments continue to work together to grow this important industry and ensure its sustainability so that all stakeholders derive the maximum benefit from it,” Calicchio added.