Nigeria is expected to be the fastest-growing hospitality market from a revenue perspective over the next five years with a projected 14.7 per cent compound annual increase in revenue, PwC stated in the 7th edition of its â€˜Hotels Outlook: 2017-2021.â€™
According to the report obtained Tuesday, the country was expected to benefit from an improving economy, continued growth in domestic tourism, and expansion in the number of available rooms.
A number of projects in Nigeria have been delayed or postponed in the wake of the recent economic uncertainty. The hotel market in Nigeria rebounded in 2016 with a 5.2 per cent increase in total revenue.
“Nigeria is projected to be the fastest-growing market from a revenue perspective over the next five years. This is mainly due to an improved economy, continued growth in domestic tourism, and expansion in the number of available rooms.
“Overall hotel room revenue is expected to expand at a 14.6 per cent, compound annual rate to US$517 million (R7.6 billion) in 2021 from US$261 million (R3.8 billion) in 2016,” the report added.
South Africa was projected to be the next-fastest growing market with a 9.3% compound annual increase in room revenue, most of which will be generated by rising average room rates and continued but moderating growth in tourism.
According to the report, South Africaâ€™s hospitality sector was poised for further growth in the next five years bolstered by inbound travelers amid a difficult and volatile economic climate.
Hospitality & Gaming Industry Leader for PwC Southern Africa, Pietro Calicchio said: â€œAfricaâ€™s hotel sector has remained resilient in the face of strong economic headwinds.â€
The report projected that South African hotel room revenue would grow by 10.1 per cent in 2017 to R17.5 billion. Overall hotel room revenue for South Africa was expected to expand at a 9.3 per cent compound annual rate to R24.8 billion in 2021 from R15.9 billion in 2016.
The PwC report stated that the outlook for the hospitality industry for 2017 was positive with an increase in the number of international visitors to South Africa expected.
â€œOne of the positive outcomes for the hotel market in South Africa was the amendment of visa requirements that required foreign visitors from certain countries to provide biometric data in person. International visitor numbers to South Africa rebounded significantly in 2016 with a 12.8% increase as compared to the 6.8% decrease in 2015,â€ Calicchio commented.
Visits from China and India increased in 2016 as a result of the relaxation in the visa requirements; travellers from China to South Africa increased by 38% and India recorded a 21.7% increase. Of non-African countries, the UK is still the largest source of visitors to South Africa at 447 840 in 2016.
Overall, room revenue in South Africa rose 12.2% to R15.8 billion in 2016, the biggest increase since 2013. Over the past five years, the occupancy rate has risen, surpassing the 60% level and reaching 61.2% in 2016. This gain has stimulated interest and a number of new hotels are expected to open in the next five years.
Five-star hotels have had the highest occupancy rates in the market at 79.3% in 2016. Room revenue for five-star hotels is expected to expand at an 11.4% compound annual rate to R4.2 billion in 2021 from R2.4 billion in 2016.
Calicchio added: â€œThe hotel market in each country is affected by both the local and global economy, with some countries being more dependent on foreign visitors than others. We are also seeing certain local governments continuing to invest in infrastructure and implementing other plans to unlock the substantial potential that this industry has to bring.â€