THE tourism sector in Africa has proved to be more resilient despite prevailing economic shocks across the continent with more opportunities for growth particularly in the hotel segment, hospitality industry leader with Pricewaterhouse Coopers (PwC) Southern Africa, Pietro Calicchio, says.
Given the continent’s rich and diverse natural heritage, tourism is increasingly seen as a low-hanging fruit for Africa, with potential to impact positively on developing economies, thereby creating more job opportunities and alleviating poverty.
Highlights from a latest report issued last week by PwC on Africa’s hotel sector indicate the continent is well positioned for positive growth despite persistent macro-economic hurdles across the divide. PwC’s eighth edition of the Hotels outlook: 2018-2022 includes information about hotel accommodation in South Africa, Nigeria, Mauritius, Kenya and Tanzania.
“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,” says Calicchio. “The opportunities are plenty for this industry to enjoy further growth albeit at a more modest pace.”
The report highlights, issued by PwC’s media consultancy, projects that hotel room revenue for the five markets under focus, as a group, will increase at a 7,4% compound annual rate to 50,5 billion Rand in 2022 from 35,2 billion rand in 2017. During the period South African hotel room revenue alone is expected to expand to 21,8 billion rand, up 5,6%, compounded annually, from 16.6 billion rand in 2017. The trend, from the report, shows Africa’s hotel sector has the potential for further growth over the next five years. The report projects that Nigeria will be the fastest-growing country over the next five years with a number of new hotels scheduled for opening during the period. This trajectory is set to be compounded by improvement in the domestic economy.
PwC sees Kenya, Tanzania and Mauritius as the next fastest growing destinations after Nigeria, with compound annual increases of 9.6%, 9.1% and 7.2%, respectively. South Africa is projected to be the slowest growing market with a 5.6% compound annual increase in room revenue. According to PwC, an increase in the number of foreign and domestic travellers, as well as an expansion in the number of hotel chains on the continent is set to reinforce the hotel sector’s untapped potential for business growth. As the hotel and tourism sectors in each of the countries show signs of continued growth over the forecast period, PwC suggests that tourism remains an important part of each economy. Calicchio, however, notes that a number of challenges continue to face each country as the tourism industry tends to be reactive to the slight changes in political, regulatory, safety and sustainability matters.
“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,” adds Calicchio.
The growth in hotel rooms in South Africa, for instance, remains similar to the 2017 forecast with an additional 2 900 rooms set to be added over the next five years. The report further projects that occupancy rates for the top destination in Southern Africa will continue to grow over the forecast period and to reach 62.5% in 2022. While international travel to South Africa continued to grow with a 2,4% overall increase, PwC has said the outlook for 2018 remains positive albeit at lower percentages than experienced in 2016. The report projects that the number of foreign visitors and domestic tourism will increase by 5.3% in 2018 while the total number of travellers is expected to reach 19,5 million by 2022, a 4% compound annual increase from 16 million in 2017.
“There is also continued debate on further relaxation of visa requirements for international visitors and this may impact on our forecast growth,” Calicchio further commented. The report shows visitors from China to South Africa fell 17% in 2017 while those from India rose a modest 2.7%. The United Kingdom remains still the largest source of non-African visitors to South Africa at 447 901 in 2017, contributing to the overall growth of 7,2% in visitors in 2017, says PwC. Of African visitors, the largest number came from Zimbabwe at 2 million, followed by Lesotho at 1.8 million and Mozambique at 1.3 million. South Africa’s tourism industry thrives on favourable fundamentals that appear to make her more competitive when compared to her regional neighbours.
PwC reports that a number of four-star hotels were opened in Africa in 2017 resulting in 1.8% increase in rooms, the first rise since 2013. It says most of the hotel openings scheduled for the coming years will be four-star hotels, leading to a projected 2.4% compound annual increase in available four-star rooms over the next five years. According to the report, hotel markets in Nigeria and Mauritius performed well in 2017 after 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 are expected to rise from 9 700 in 2017 to 12 600 in 2022, a 5.4% compound annual increase – still the largest expansion of any country in the report. Meanwhile, hotel room revenue in Mauritius increased by 12.7% in 2017 and the country continues to experience growth in the number of foreign visitors. Kenya on one hand experienced a drop in visitors following the national elections in August 2017 but recovery was already seen in December with an increase in visitor numbers resulting in 9.9% overall growth. However, PwC says this was not enough to boost overall room revenue, which showed a 13.5% decline in 2017. Going forward, the report says tourism in Kenya is expected to increase at a 6.9% compound annual rate, rising to 2.06 million in 2022 from 1.47 million in 2017.
PricewaterhouseCoopers is a multinational professional services network headquartered in London, United Kingdom and is one of the largest services firms in the world. It has a presence in 34 Africa countries with an office footprint covering 66 offices. With a single Africa leadership team and more than 400 partners and 9000 professionals across Africa, the firm serves some of the continent’s largest businesses across all industries.