Nairobi Tops List In The Inaugural Knight Frank’s Hotels Africa 2018 Report

There’s no doubt that Africa’s population is growing faster than that of any other global region and an area that’s taking note of this is global and local hotel chains, which have targeted Africa as a growth region.

UN projections suggest that the
populations of cities such as Luanda,
Lagos, Dar es Salaam, Nairobi and Addis
Ababa forecast to grow by more than
80% during the 2015-2030 period. This means that Africa’s fast-growing, economically developing cities will need increased numbers of hotel rooms to
accommodate both business travellers
and rising tourist demand.

According to the Knight Frank report, Nairobi is one of the hotspots for hotel property development as investors take advantage of the relative undersupply of international-grade hotels across most of Africa and the expected increase in demand for rooms.

The Knight Frank Hotels Africa 2018 report shows that Nairobi, Dar es Salaam, Zanzibar and Seychelles are the hotel development hotspots in Eastern Africa—with the region accounting for 26% of pipeline projects in the continent. West Africa tops with 35% of hotel projects under construction, followed by North Africa with 29%.

Further into the report, we find that international hotel chains are increasingly focused on markets currently perceived as undersupplied, hence the significant variation in the distribution of pipeline projects.

Currently, Kenya sits fifth in the list of top 10 African countries with the highest number of chain and branded hotels—excluding lodges, safari camps, chalets and cruise-hotels—according to data compiled by Knight Frank Research for up to December 2017. The Hotels Africa 2018 report shows Kenya had 68 chain and branded hotels, as South Africa led with 430, followed by Egypt (300), Morocco (153) and Tunisia (103). Mauritius, Nigeria, Tanzania, Zimbabwe and Algeria are the other countries in the top 10 list.

Ben Woodhams, Managing Director at Knight Frank Kenya, said: “Nairobi’s position as a major regional hub will be further reinforced by the growth of this sector in the city.”

The report notes that most international hotel groups have asset-light business models in Africa whereby they operate, without owning, their branded hotels.

“This creates opportunities for developers and investors to either build or acquire properties operated by the major chains,” the report states.

However, one of the key challenges faced in brands seeking to grow their African portfolios is the long construction times. To circumvent this, some hotel groups are pursuing growth strategies that prioritise rebranding existing properties instead of building new ones. Others include access to finance, high construction costs and the Airbnb uprise, which according to the report, stands at 62% as of April.

“Across the continent, development activity is being driven primarily by the expansion plans of the larger multinational hotel groups. All of the major global players have multiple hotels under development across Africa, and several of them have made eye-catching announcements about their future African plans,” the report notes.

Major brands that that have announced Kenya expansion plans include Marriott International which will open at AVIC International’s building in Westlands, Nairobi, and Hilton Hotel, which will open at The Pinnacle in Upper Hill.

In addition to the well-known international hotel operators, several brands operating solely in Africa are actively growing their businesses. Examples include CityBlue, a chain owned by UAE investor Diar Capital, which has opened hotels in four East African countries and has signed pipeline deals in a further eight countries in East and West Africa.