Hotel demand growing across Dar es Salaam, Lagos and Nairobi

Saturday, 17 December 2011 00:00 - - {{hitsCtrl.values.hits}}

According to data from STR Global, hotel demand grew strongly across the three main economic centres in Western and Eastern Africa for year-to-date October 2011, compared to the previous year.

Demand grew 27.9% in Lagos, Nigeria, 19.4% in Dar es Salaam, Tanzania, and 10.7% in Nairobi, Kenya.

STR Global now reports on nine hotels in each of the three cities, highlighting the growing focus of international and regional chains on sub-Saharan Africa. With limited new hotel supply expected in the near future in Dar es Salaam and 996 rooms in Nairobi’s pipeline, only Lagos is anticipating to almost double its room inventory with an additional 3,038 rooms at different stages of development.

In Lagos, Nigeria’s main economic hub and third largest city in Africa behind Cairo and Kinshasa, hotel market performance was led by growing occupancy (+3.2%) compared to the previous year benefiting from strong demand by oil-related industries and the growing non-oil business sectors. The increasing supply in the city resulted in more pressure on price competitiveness. The ADR declined by 9.5% to US$279 for year-to-date October 2011. Despite the fall of Lagos’ ADR, it is still one of the highest across the continent.

On the Eastern coast of Africa, Dar es Salaam, the economic centre of Tanzania, increased its occupancy year-to-date October 2011 to 69.2% (+19.3%) compared to 58% the previous year. The main drivers for such performance have been led by the limited new hotel supply (+0.1%) and the double-digit demand growth (19%). As the Tanzanian Shilling depreciated against the U.S. dollar, losing 30% since January 2011, Dar es Salaam saw declining ADR by 1.4% to US$ 122.87 year-to-date October 2011, whilst in local currency ADR was up 8.5%. RevPAR grew by 17.6% to US$ 85.02 during the same period.

In the neighbouring country of Kenya, Nairobi’s RevPAR increased by 11.3% to US$103.11, led by increased hotel demand (+10.7%) year-to-date October 2011, whilst hotel supply growth was more muted, up 3.1% during the 10-month period against the previous year. Occupancy increased to 69.3% year-to-date October 2011 compared to 64.5% the previous year. ADR improved 3.6% to US$148.89, which due to the depreciation of the Kenyan Shilling corresponded to a 14.6-percent increase in local currency.

“The last decade has seen much of the attention by international hotel chains for new hotel development focused on Asia and the Middle East. Africa has now emerged as the land of opportunities for new hotel projects, which will significantly contribute to the economic development of Africa’s cities,” said Elizabeth Randall, managing director of STR Global. “The long-term growth in hotel development and future performance will remain closely linked with the economic growth potential of each country and the perception of security, which will influence investors and travellers alike.”