Recent hospitality consulting work in West Africa points to a turnaround in the hospitality markets in key West African cities, such as Accra, Lagos, and Luanda. Hospitality consulting research has shown that West African countries were negatively affected by the Ebola virus, as well as the decline in commodities’ prices, notably oil, on which many West African economies rely.
Accra has shown the fastest recovery according to hospitality consulting research and an assessment of STR statistics. Occupancy in Accra has declined consistently between 2014 and 2016 due to new supply entering the market and a decline in corporate related demand. Hospitality consulting analyses show that rooms sold declined by 8,3% in 2014 and 0,3% in 2015. However, despite an 11,1% decline in occupancy in 2016, the rooms sold showed a positive improvement with a growth of 22,5%. A positive occupancy growth of 13,7% was recorded in 2017, along with an equivalent growth in the number of rooms sold. Hospitality consulting research indicates Accra is once again on the rise.
Lagos shows a similar trend with research showing more positive occupancy growth in 2016 (2,7%) after occupancy declines of 10,9% and 11,3% in 2014 and 2015 respectively. The number of rooms sold over this period also declined by 3,6% and 8,3% due to the Ebola virus and the decline in the oil price. In 2017, a stronger recovery was evident with an occupancy growth of 14,8% and a growth of 17,6% in rooms sold. Commensurate with Accra, Lagos is in recovery and the hospitality consulting experts predict that the projects that have been put on hold over the last few years will once again gain traction.
Hospitality consulting experts also indicate that Luanda could be making a strong recovery after a period of stagnant market growth. The vulnerability of the Angolan economy, due to its reliance on oil, was evident when decreasing oil prices saw a negative GDP growth in 2016 of -0,7%. However, the recovery in the oil price, currently trading around USD 75 a barrel, has seen a renewed energy in Angola, with GDP growth projections of 1,8% for 2017 and 3,3% for 2018. The more optimistic economic environment will have a positive effect on the hotel sector. The research indicates that countrywide occupancies have declined reaching a low of 59% in 2016 (according to the Angolan National Institute of Statistics) from a high of 70% in 2011. The weakened economic environment, combined with a slowdown in the oil sector, negatively affected the market, most notably in Luanda. A number of new hotel projects, many expected to enter the market in 2015, were put on hold as developers chose to wait out the more challenging market conditions. Given the more positive economic outlook, hospitality consulting experts expect market growth in the hospitality sector in Luanda in the medium term.
HTI Consulting has recent and extensive hospitality consulting experience in Accra, Lagos, and Luanda, and can assist in advising investors wishing to enter these markets.