STR: Cairo leads African hotel development

14th Jun 2016
STR: Cairo leads African hotel development

Cairo and Cape Town’s hotel markets have experienced strong performances over the past five years, according to figures from data and analytics specialist STR.

Despite political turmoil, Cairo is starting to recover and the compound of annual growth rate for revenue per available room was up 14.9 per cent for the 2011 to 2015 time period.

In the first quarter of 2016, RevPAR increased 14.1 per cent compared with quarter one of 2015, indicating this recovery trend has carried into the current year.

“Demand in Cairo has fluctuated significantly since the Arab Spring in 2011 and the regime shift in 2013,” said Thomas Emanuel, director of business development for STR.

“But occupancy is starting to recover, and the hotel development pipeline remains fairly robust.

“The high year-over-year performance increases in 2014 and 2015, are however, coming off an extremely weak 2013.”

Cape Town has also seen positive growth in average daily room rates.

The CAGR for RevPAR was up 13.6 per cent over the five years, but it has taken time for this market to absorb the extra room capacity created for the World Cup in 2010.

Johannesburg, which saw a 7.9% CAGR increase in RevPAR, experienced a similar problem.

A weak South African Rand has helped make the country an affordable destination for international tourists.

In Q1 2016, Cape Town’s RevPAR increased 18.9 per cent, while Johannesburg’s increased 18.7 per cent, indicating that both markets opened this year much stronger than in quarter one of 2015.

STR analysis suggests that the struggling economy in France has hit Casablanca, as the market relies heavily on corporate demand from France.

Occupancy is still in decline, but not as substantially as it has been in recent years.

“This market is significantly more stable than several other markets in Africa,” Emanuel said, “but recovery will depend on several economic factors and geopolitical stability.”

The analysis comes ahead of the Africa Hotel Investment Forum in Togo in June, where Philip Wooller, STR’s Middle East and Africa director, will present.

“Africa’s hotel market is as diverse as the continent itself,” said Wooller.

“But it’s also interesting to look at the current supply growth trends, as that keeps us thinking about the future.

“In April 2016, there was a 26.7 per cent increase in rooms under contract compared with April 2015 and a 39.6 per cent increase in rooms in construction for the same time period.

“We will definitely keep an eye on how this development plays out.”


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