Hotel room rates in Addis Ababa dwarfs Lagos, Johannesburg, Nairobi – Survey

A survey of prices of international grade hotels in selected major African cities has revealed that Addis Ababa, the Ethiopian capital city, is the most expensive place for a hotel stay surprisingly beating destinations like Nairobi, Lagos and Johannesburg.

The survey of prices of international grade hotels in selected major African cities, produced by hospitality research firm STR Global, ahead of the Africa Hotel Investment Forum (AHIF), taking place at the end of September, has revealed that Addis Ababa is the most expensive in terms of charges for hotel rooms.

STR Global provides hotel operators, developers, financiers, analysts and suppliers to the hotel industry, access to hotel research with regular and custom reports covering Europe, Middle East, Africa, Asia Pacific and South America.

The average rate in US$ for a hotel room in the first six months of this year in Addis Ababa was $231.78/ night.  This compares with $215.75 for a room in Lagos, $144.76 in Nairobi, $122.30 in Cape Town, $105.73 in Casablanca, $103.54 in Cairo, $72.90 in Johannesburg and $70.70 in Sharm El Sheikh (Egypt).

When one notes that the price of a hotel room in Nairobi is almost double that in Johannesburg and the room rate in Addis is 60% more expensive than Nairobi, one is tempted to ask how prices can be so different.

“A great deal of the reason for the difference in rates across major African cities is simply supply and demand.”  Addis Ababa has a shortage of top quality hotels.  However, with the Ethiopian economy growing at a rapid rate of more than 10% per annum for the whole of the last decade, with more conferences coming to the city by virtue of its status as the seat of the African Union and with Ethiopian Airways on a similar growth trajectory to the country, thanks to new routes and increased passenger numbers, there is a high demand for premium hotel rooms.  By comparison, Johannesburg is a long-established, sophisticated international city, with a large number of 5* hotels and a competitive market for accommodation.

“Looking at how hotel prices have changed over the past year (year to date June ’14-’15), there have been substantial rate rises in Sharm El Sheikh, up 42.5%, Addis Ababa, up 14.9%, Johannesburg, up 11.0% Cape Town, up 10.8% and Cairo, up 10.6%.  Whereas, there has been a recovery in Lagos up 5.8% whilst Nairobi is broadly the same and Casablanca has suffered a 4.0% decline,” said Thomas Emanuel, Director of Business Development, STR Global.

Continuing, the STR chief said: “The increases in Sharm El Sheikh and Cairo can be explained as a recovery in tourism to Egypt, following several years of political unrest.  Cape Town’s improvement is due predominantly to increased demand and no recent increases in supply since the 2010 World Cup.  In the face of the recent terrorism incidents in Kenya, Nairobi’s hoteliers have chosen to maintain rates but they have suffered with lower occupancy.  The rise in room rates in Lagos cannot be explained simply by supply and demand because there has been a combination of factors that would normally be expected to exert a downward pressure on price.  First, there is a hotel development boom in Lagos with 3,611 new hotel rooms in the pipeline, according to W Hospitality Group, second, there has been a collapse in the oil price, which is damaging Nigeria’s heavily oil-dependent economy and third, occupancy has fallen below 50%.  The rate decline in Casablanca is due in part to economic weakness in France, its major source market and in part to currency fluctuations.”

At AHIF, Thomas will be reporting on year-on-year hotel performance in some of Africa’s key markets and adding further interpretation and analysis of the main trends.

On his part, Matthew Weihs, Managing Director, Bench Events, which organises AHIF, and which also attracts all the major international hotel investors in Africa, where this information will be discussed in detail, concluded: “The wide disparity in room rates with exceptional prices being achieved in places where there is a shortage of supply, make it clear that there are parts of Africa that offer very attractive prospects for hotel investors. The best way to gain a deeper understanding of this industry is to come to Addis and meet the people who are driving it forward.”

AHIF is the preeminent gathering of international investors in hotels in Africa.  It takes place in Addis Ababa on September 30 – October 1.

AHIF is the premier hotel investment conference in Africa, attracting many prominent international hotel owners, investors, financiers, management companies and their advisers. It is organised by Bench Events, which is known for producing, alongside Questex Travel + Hospitality and MEED Events, several other top-level hotel conferences around the world including Berlin (IHIF), Dubai (AHIC), Istanbul (CATHIC) and Moscow (RHIC).