HVS Africa Ho­tel Val­u­a­tion Index 2017

Tourism Tattler - - EDITORIAL -

HVS, the global hos­pi­tal­ity con­sult­ing firm and host of the THINC Africa con­fer­ence, launched their 2017 African Ho­tel Val­u­a­tion Index (HVI) at the con­fer­ence. This year sees the fourth edi­tion of the African HVI, which in­cludes more mar­kets and in­creas­ing progress for Africa.

“The num­ber of mar­kets in­cluded in the study con­tin­ues to grow each year, ex­em­pli­fy­ing the ever-in­creas­ing in­ter­est in the African ho­tel mar­ket. In the first edi­tion, we had 14 cities. That grew to 18 in the sec­ond edi­tion, the third edi­tion fea­tured 21 cities, and we are now de­lighted to in­clude 23 cities with the ad­di­tion of Abid­jan, Dakar, Kam­pala, and Ma­puto in the fourth edi­tion of the 2017 HVI,” says Tim Smith, man­ag­ing part­ner at HVS South Africa.

The HVI pro­vides re­li­able, ac­cu­rate data to ho­tel in­vestors, en­abling them to as­sess risk and re­ward for fu­ture de­vel­op­ments. Data is not eas­ily avail­able across Africa; it sim­ply does not ex­ist, or it is old or in­con­sis­tent. HVS has ac­cess to data through its ex­ten­sive net­work and data­base, which al­lows in-depth ex­ten­sive re­search and data gath­er­ing in or­der to pro­vide ac­cu­rate data and ob­jec­tive in­sights on each of the African mar­kets.

Smith says that in spite of the chal­lenges of Ebola, the Zika Virus, pres­i­den­tial elec­tions slow­ing down economies, low oil prices and the threat of ter­ror­ism, 17 out of the 23 mar­kets cov­ered in­creased value in 2016.

In 2015, 10 mar­kets out of 21 cities were grow­ing; in 2016, 14 mar­kets were on the rise and Ma­puto, Wind­hoek and Casablanca, among oth­ers, have shown an im­pres­sive re­cov­ery.

The HVI re­ports that most African coun­tries now have a steady but re­al­is­tic growth that in­vestors can rely on when mak­ing in­vest­ment de­ci­sions. De­spite a more con­ser­va­tive out­look, GDP is much higher than many global economies.

“The fu­ture of ho­tel de­mand in Africa will fol­low a pos­i­tive trend in the long-term. Signs of re­cov­ery and im­prove­ment on 2016's rel­a­tively tough num­bers are al­ready up and most of these mar­kets are con­tin­u­ing to grow, so we are ex­pect­ing 2017 to be even bet­ter,” said Smith.

On South Africa, Smith said ho­tel val­ues are boom­ing in Cape Town in Rand but the re­turn looks far less ex­cit­ing when con­verted back in US$ terms. “That all comes down to cur­rency; the Rand weak­ened by 15% in 2016 vs. 2015 and is now up by 10% against the US$ 2016.”

The HVI re­ports that the fu­ture of South Africa's tourism is look­ing promis­ing as the Rand has re­cently strength­ened again and more than 2500 rooms are ex­pected to be added over the next five years, in­clud­ing the new Radis­son Blu, Radis­son RED, Sun In­ter­na­tional, Mar­riott, Tsogo Sun and Ibis brands.

The HVI is a ho­tel val­u­a­tion bench­mark de­vel­oped by HVS. It mon­i­tors an­nual per­cent­age changes in the val­ues of typ­i­cally four-star and fives­tar ho­tels in 23 ma­jor African cities. Ad­di­tion­ally, the index al­lows rank­ing of each mar­ket rel­a­tive to an African av­er­age. The HVI also re­ports the av­er­age value per room, in US dol­lars, for each mar­ket. All data pre­sented is in US dol­lars.

But re­stric­tive visa con­di­tions have broad eco­nomic con­se­quences for the tourism sec­tor. The African Union (AU) launched the Africa Visa Open­ness Index ac­knowl­edg­ing the im­por­tance of the move­ment of peo­ple within Africa, mark­ing an en­cour­ag­ing step for­ward for African economies. Many coun­tries such as Mozam­bique, Sene­gal, Ethiopia and Uganda now of­fer visa on ar­rival open­ing their bor­ders to a broader range of tourists.

The African ho­tel in­dus­try will con­tinue to face chal­lenges in the short­term. How­ever, the pos­i­tive news is that In­ter­na­tional and African unions are work­ing to­gether to pro­mote the fu­ture of tourism in Africa, con­nec­tiv­ity is im­prov­ing at a fast pace and many coun­tries in­tro­duced e-visa and visa on ar­rivals in 2016/17.

A sum­mary of the Africa Ho­tel Mar­ket by value and coun­try ap­pear on the fol­low­ing pages. The full re­port can be down­loaded here.

At­tend­ing the HVS THINC Africa con­fer­ence in Cape Town were (from left): Stephen Rush­more (Global CEO and Pres­i­dent of HVS), James Vos (Demo­cratic Al­liance Shadow Min­is­ter of Tourism) and Tim Smith (Man­ag­ing Part­ner HVS South Africa).

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