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A research carried out recently by Pricewaterhouse Cooper LLP (PwC) in South Africa Nigeria, Mauritius and Kenya has revealed that hospitality in Africa is to grow in the next five years.

According to the statement released by PwC, despite the fact that South Africa’s economy is facing headwinds, the hospitality sector is poised for further growth in the next five years in the wake of a number of inbound travelers into the African continent.

The statement quotes PwC’s Leader of Hospitality and Gaming saying “Although South Africa’s economy has weakened, growth in international travel and tourism and rising room rates have bolstered the hospitality sector.”

PwC’s 4th edition of the ‘Hospitality Outlook: 2014-2018’ projects that by the year 2018 the overall occupancy rate across all sectors in South Africa will increase, rising to an estimated 58.4 percent. Total room revenue is expected to reach R28.7 billion in 2018, a 10.7 percent compound annual increase from 2013.

“Occupancy rates are expected to increase for hotels over the next five years, overtaking guest houses, bush lodges and guest farms to again become the leading category,” says Forster. Occupancy rates for hotels are projected to increase from 58.9 percent in 2013 to 71.1 percent in 2018.

The report also features information about hotel accommodation in Nigeria, Mauritius,and Kenya. Accommodation sectors in South Africa, Kenya, Nigeria, and Mauritius consist of hotels, guest houses and guest farms, game lodges, caravan sites, camping sites and other overnight accommodation.

“One of the most significant developments in 2013 in the South African hospitality industry was the rise in average room rates, which increased 8.4 percent, well above the 5.9 percent rate of inflation,” says Forster.

Despite the recent economic uncertainty, the total number of foreign overnight visitors to South Africa rose 3.9 percent in 2013, down from the 10.2 percent increase in 2012, but still reflecting continued growth in foreign travel to South Africa. Foreign travel to South Africa was boosted in early 2013 by the African Cup of Nations football tournament and in December following the death of the late President Nelson Mandela, which led to an increase in the number of visitors to Robben Island where he spent many years in jail. “The continued depreciation of the Rand is also credited with contributing to the growth in foreign tourism by making South Africa a less expensive country to visit,” adds Forster. South Africans are also tightening their belts when it comes to luxury holidays abroad and turning to local travel as an alternative. The total number of travelers in South Africa is projected to reach 17.6 million.

In 2013, overall spending on rooms in South Africa in all categories rose 14 percent to R17.3 billion, reflecting an increase in stay unit nights and an 8.4 percent rise in the average room rate. The pick-up in hotel occupancy rates has stimulated new activity in the industry, with a number of major hotel chains in the process of upgrading facilities, renovating their properties or making plans to open new hotels. The report estimates that by 2018 there will be about 63,600 hotel rooms available up from 60,900 in 2013.

Nigeria’s economy is booming, buoyed in part by regional and international investment. Hotel room revenue rose 59 percent between 2009 and 2013. Conversely hotel room revenue in Mauritius decreased by 8.7 percent in 2013 but is projected to grow at 4.6 percent compounded annually to 2018. Kenya’s hotel market declined during the past two years, largely due to terrorist concerns.

The hotel market in Nigeria grew 9 percent in 2013, which was the smallest gain since 2010. Stay unit nights increased 6.3 percent in 2013 and have grown faster than room availability over the past three years. Average room rates have grown slowly in the last two years, rising by only 2.5 percent in 2013. The number of hotel rooms is expected to triple during the next five years, rising from 8,400 in 2013 to 24,000 in 2018. Overall hotel room revenue is also anticipated to expand at a 22.6 percent compound annual rate to $1.1 billion (R12.1 billion) in 2018 from $413 million (R4.4 billion) in 2013.

Mauritius competes with the Maldives, Sri Lanka and the Seychelles for the tropical tourist market. The average hotel room in Mauritius costs €170 (R2 492); 2.7 times higher than average rates in South Africa and 28 percent higher than South Africa’s average five-star room rate. Due to the number of renovations and projects taking place in the industry, the number of available hotel rooms is expected to increase at a 2.9 percent compound annual rate to 14 250 in 2018. The average occupancy rate will edge down from 63.3 percent in 2013 to 61.5 percent in 2018.

Kenya’s hotel market declined during the past two years, falling 6.6 percent in 2012 and an additional 2.6 percent in 2013. Concerns about terrorism led several countries including the US and the UK, to issue travel alerts that discouraged people from visiting Kenya. The number of available rooms in Kenya is however projected to increase from 17,500 in 2013 to 19,400 in 2018 with an increase in the average room rate from $155 (R1 641) in 2013 to $163 (R1 726) in 2018. Total room revenue is expected to expand by 2.5 percent compounded annually, rising to $668 million (R7.1 billion) in 2018 from $589 million (R6.2 billion) in 2013.

Foster concluded by saying, “Growth in travel and tourism is expected to fuel growth in the accommodation industry across the African continent during the next five years.”

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