Nigeria is beating Kenya and South Africa in the race for hotel room revenue

The report, African insights Hotels Outlook: 2017–2021, notes that Nigeria is projected to be the fastest growing market from a revenue perspective over the next five years with a projected 14.7% compound annual increase in revenue.

This being buoyed by factors such as an improving economy, continued growth in domestic tourism, and expansion in the number of available rooms, which will keep average room rate growth lower than the rate of inflation.

“In Nigeria, growth in domestic tourism, in part stemming from a weak economy and the falling value of the Nigerian naira, which discouraged foreign travel, helped offset a decline in foreign visitors.”

“Further devaluation of the naira will have a positive impact on the underlying market, although spending figures expressed in US dollars may appear to be lower because of the devaluation,” read the report compiled by PricewaterhouseCoopers (PwC) which is the largest provider of professional services in Africa, with more than 400 partners and over 9 000 staff on the ground in 34 countries.

The report provides insights on the hotels segment of the hospitality market, with detailed forecasts and analysis and was done in five countries namely Kenya, Mauritius, Nigeria, Tanzania and South Africa.

Overall room revenue in South Africa, Nigeria, Mauritius, Kenya and Tanzania rose 12.2% in 2016, the biggest increase since 2013. Mauritius and South Africa had the largest gains at 15.3% and 12.2%, respectively, each benefiting from double-digit growth in foreign tourism.

South Africa and Kenya are projected to be the next fastest growing markets with a 9.3 and 7.5 per cent compound annual increase in room revenues respectively.

In the South African market, overall revenue from hotel room accommodation rose 12.2% to R15.8 billion ($1.2 billion). The country’s relaxation of visa requirements contributed to its growth in foreign tourism with the International visitor numbers rebounding significantly with a 12.8% increase, compared to the 6.8% decrease in 2015.

Kenya on the other hand benefited from the lifting of travel advisories to that country and growth in domestic tourism in a strong economic environment.

Tanzania is expected to see a 6.9 increase in hotel room revenue with the report noting that the full impact of the new VAT on tourism services will lead to a decline in 2017, followed by large increases during the subsequent three years.

“Infrastructure investments, improved air access in Tanzania with improvements at Air Tanzania and a strong economy that will support growth in domestic tourism will contribute to the expected rebound.”

Mauritius looks to be the slowest-growing of the five countries with a 6.2% compound annual increase in room revenue. The country’s market, that is becoming more competitive owing to the arrival of online platform AirBnB, is expected to grow in the next few years owing to ongoing growth in tourism and rising room rates.