COVID-19 threatens to ruin Africa’s hoteliers record year

But for tech savvy investors, this is a moment of opportunity to invest to capitalise on the upturn as soon as it comes

Nairobi, Kenya | THE INDEPENDENT | African hotel development had returned to growth at the start of 2020, with more than 78,000 rooms in 408 hotels in the pipeline, according to the 12th annual survey by W Hospitality Group, acknowledged as the industry’s most authoritative source. However, the COVID-19 outbreak is now shattering the dreams of Africa’s hotel industry. W Hospitality Group’s Managing Director, Trevor Ward, said the growth of the chains’ presence in Africa has been a very positive story since 2009, and that it was clear from the numbers that the chains, developers and investors continue to believe in the opportunities that Africa presents in the hotel and tourism industry.

“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,” he said in statement on June.17.

“With that background, we see a slowdown in pipeline growth in 2020, as we all get to grips with the new reality.

“ Ward said 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, due to closed or slowerpaced construction sites, restrictions on funding and a lack of market demand.

“ According to our latest data, there are 90 hotels with 17,000 rooms scheduled to open in 2020, but we estimate that at least half of these will be delayed, bringing the actualisation rate down to no more than 40%,” he said. This year’s African Hotel Chain Development Pipeline survey covers 35 international and regional hotel contributors across the 54 countries in north and sub-Saharan Africa, and in the Indian Ocean islands.

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

The survey notes that Accor Hotels performed particularly well; opening 18 hotels last year with almost 3,500 rooms in its various brands, ranging from Ibis to Fairmont.

Marriott, the world’s largest hotel chain, has the largest pipeline in Africa, 22 per cent more hotels and 6 per cent 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. If Accor can open its hotels in 2020 at the same rate that it did in 2019, it is likely that the company will overtake Marriott and position itself as the largest operator in Africa.

“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,” Ward said.

“Tourism is such an important industry in Africa, 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.”

Matthew Weihs, Managing Director of Bench Events 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, Weihs said 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 capitalise on the upturn as soon as it comes.

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