Utilising figures provided by STR, HTI Consulting conducted hospitality research into the Dar es Salaam hotel market. The hospitality research indicated that between 2013 and 2014, the hotel market had a stable performance with occupancy rates above 70% and ADR exceeding USD 130. However, from 2015, the hospitality research shows that the occupancy levels in the market began to decline. In 2015 and 2016, occupancy levels declined by 5,1 and 4,3 percentage points respectively. The reduction in occupancies over this period was driven by an increase in supply (with the opening of 262 branded rooms in 2014 and 2015), the revoking of CTA visas under the presidency of John Magufuli, and a cut in government spending – a strong driver of room night demand (particularly in terms of conferencing). Despite the declining occupancy, the hospitality research showed that ADR remained relatively stagnant over the 2013 to 2016 period.
In 2017, the trend of decline continued with a decline of 5,6 percentage points when compared to 2016, despite no additional supply entering the market. The hospitality research further indicated that ADR recorded a decline of 7,8% compared to 2016, which in turn led to a RevPAR decline of 16,1% in 2017. The hoteliers in the market highlighted that the decline in occupancy and ADR was driven by a number of government policies put in place (export ban on unprocessed gold and copper ore), which deterred foreign investment and, in turn, contributed to a number of companies withdrawing their employees from Dar es Salaam (particularly within the mining sector). A number of other investors from diverse sectors have withdrawn their interests in Tanzania or are adopting a wait-and-see approach. Investors are waiting to see an increase in government spend and a clear policy in terms of the private sector.
YTD September 2018 hospitality research shows that the challenges facing the market continue with reductions of 2,7%, 4,7%, and 7,3% in occupancy, ADR, and RevPAR respectively. Considering the positive economic growth forecast for the country, the continued reductions are surprising. However, an increasingly authoritarian government approach continues to affect investor sentiment. Elections are, however, proposed for 2020 and BMI Research project that the chances of an opposition victory are increasing, given their improved performance in the past two elections. This could lead to a level of political instability prior to and after the elections, which could further affect the hospitality market in the city.