Accra, the capital city of Ghana, has been a key driver of growth in the African hospitality market over the past ten years. Prior to 2000, a total of 926 quality hotel rooms entered the Accra hospitality market. In line with the growing economy, hotel investment gained momentum with a total of 545 quality hotel rooms opening between 2000 and 2009 – an increase of supply of 58,9%. The discovery of oil in Ghana added further incentive for the development of additional properties in the hospitality market, with approximately 1 400 quality rooms opening between 2010 and 2015.
Despite the high levels of investment in the Accra hospitality market, market conditions remained positive until the economic slowdown of 2015 and 2016. Prior to that, strong occupancy and strong fundamentals had prompted the interests of multiple investors, resulting in an extensive pipeline for development, which led to an increase in supply (37,8%) between 2015 and 2016. Although this triggered a decline in the hospitality market, occupancies of 6,8 percentage points, rooms sold increased 22,4% over this period, indicating a positive growth in demand for hotels in the city.
Growth in demand has continued in the city’s hospitality market year to date, March 2018, with STR figures reporting a 12,5% increase in rooms sold, due in most part to economic growth in the oil and gas sector, as well as buoyant activity across a range of divisions, including infrastructure, finance, and telecoms. The stable political climate and improving business environment, coupled with the favourable growth outlook, should help Ghana to sustain high levels of foreign investment over the long term, which will have a positive knock-on effect for the hospitality market.
While a growth in demand bodes well for the future performance of hotels, we anticipate pressure going forward, given the entry of the Marriott (April 2018), and the expected entry of the Hilton Garden Inn and the Radisson Blu to the hospitality market, which will further increase the number of rooms available. In addition, the high levels of recent demand growth have the potential to entice further investments into the hospitality market in Accra.
In speaking to hospitality market representatives, HTI Consulting established that given the more positive economic outlook for Ghana, relative to others in West Africa, coupled with the government’s pro-active stance towards the development of tourism in Ghana, it is possible that demand could keep pace with supply.
The outlook for the hospitality market in Accra is therefore cautiously optimistic.
HTI Consulting has extensive experience within the Accra hospitality market, including feasibility studies, due diligence assistance, brokerage, operator selection, and management contract negotiation for hotels within Accra and its surrounding areas.