COVID-19 to cut Africa's hotel pipeline growth – says W Hospitality
According to W Hospitality, Marriott currently has the largest pipeline in Africa, with 22 per cent more hotels and 6 per cent more rooms than second-placed Accor.
W Hospitality Group, a Lagos-based expert in hotels, tourism and leisure, has said the positive growth of hotel chains that has been recorded in Africa since 2009 will be curtailed in 2020 due to the COVID-19 pandemic. According to the firm’s 12th annual survey, more than 78,000 rooms in 408 hotels across the continent were already in the pipeline at the start of this year.
However, with the impact of the coronavirus outbreak, which has led to a virtually total shutdown of borders and the aviation sector, there will be a significant slowdown in hotel development. The 2020 African Hotel Chain Development Pipeline survey covers 35 international and regional hotel brands across the 54 countries in North and sub-Saharan Africa, and in the Indian Ocean islands. It also reveals a 3.6 per cent increase on the 2019 pipeline.
“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,” said Trevor Ward, W Hospitality Group’s Managing Director. “With that background, we see a slowdown in pipeline growth in 2020, as we all get to grips with the new reality.”
W Hospitality said due to the lockdowns, much fewer deals will be signed, and some of the planned openings in 2020 will inevitably be delayed. Ward said, “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%.”
The report also shows that a record 68 chain hotels, with a total of 11,000 rooms, opened last year – that is about 75 per cent of the properties that were scheduled to open in 2019. Accor, a French multinational hospitality company, performed particularly well, opening 18 hotels last year with almost 3,500 rooms across several of its brands, including Ibis and Fairmont.
Accor signed 25 new deals last year, compared to 17 new projects for Marriott, the world’s largest hotel chain. According to W Hospitality, Marriott currently has the largest pipeline in Africa, with 22 per cent more hotels and 6 per cent more rooms than second-placed Accor.
“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,” said the Managing Director of W Hospitality Group. “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.”
The firm said the findings of its 2020 pipeline report will be discussed in depth at Bench Events’ new virtual conference, Africa Tomorrow, scheduled to take place on July 21st. This event will complement the Africa Hotel Investment Forum (AHIF), the leading hospitality investment conference in Africa.
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, 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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