Every year since 2009 I have listened to and analyzed what the international and regional hotel chains say about the deals they are signing for new hotels and resorts in Africa. In March I publish the annual Hotel Chain Development Pipelines in Africa report. And during the year, I track what actually opened — converting the pipeline deals into the cherished goal of net unit growth (NUG). Throughout the year my colleagues and I are checking what’s opening, with a final check on Dec. 31 (our idea of a good time on New Year’s Eve!).
NUG is the net number of rooms that are added to a hotel company’s network. In their quarterly and annual reports the bosses will happily promote how big their pipelines are and how many deals they’re signing, but after noises about how Marriott’s development pipeline is bigger than anybody else’s (about 600,000 rooms, compared to Hilton’s 500,000, in case you were wondering), attention is focused particularly by their shareholders — on NUG.
According to their announcements, Hilton achieved 7.3% NUG in 2024, Hyatt 7%, Marriott 6.8%, IHG 4.3%, Wyndham 4% and Accor 3.5%. Marriott added 123,000 rooms to their global system in 2024, Hyatt 21,000, Hilton 100,000, Wyndham 68,700, IHG 59,100 and Accor 50,000. How?
There are three main strategies to achieving NUG: new development; conversions; and acquisitions of properties, brands and/or contracts.
Growth in Africa
In Africa last year, 21 international and regional (i.e. African) hotel chains opened hotels and resorts. That’s 59 hotels and resorts with 9,559 keys in 21 countries out of the total 54 on the continent. Radisson Hotel Group tops the list by a whisker with 1,540 rooms across eight properties. Marriott International is in second place (just!), opening more hotels than any other chain but of a smaller average size. Accor, TUI Hotels & Resorts and Hyatt Hotels & Resorts all passed the 1,000 keys mark.
Morocco saw the most openings, with 1,511 rooms in 10 hotels and resorts, followed by Tanzania and Kenya. Curiously, Egypt lags behind despite its leading position every year in the pipeline charts — this year there are 143 hotels and resorts, which is 25% of the entire pipeline. Yet openings in the country (three properties) were only 5% of the total openings.
For those hotels that opened in 2024, the average length of time from signing to opening was about four and a half years, with a range of one to 14 years (ouch!). Of the 59 that opened, 47 were signed five years ago or less. The chances are that those hotels with signing and opening in the same year were either well under construction before the brand was engaged (hmmm!) or were conversions. And we would hazard a guess, without knowing each project individually, that about 12 of all openings — 20% — were conversions.
There were no brand portfolio deals (brand buying brand) in Africa in 2024 that we can identify. Such deals are essential for fast growth. In fact, there have been very few — the only ones I can remember were Marriott International’s acquisition of Protea and Starwood 10 years ago, Minor Hotels buying into Sun International’s portfolio at about the same time, and Sun International’s bid for Peermont. Note that three of those four deals involve South African chains — that’s where the portfolios are.
Looking at the actualization rate of the hotel chains’ hotel development pipelines — the percentage of hotels and resorts that they actually opened compared to the number of properties that they said that they would open in the year — shows that the peak figure was in 2019, when 75% of the anticipated openings materialized. The actualization rate in 2023, just 21%, was particularly awful; I can’t put my finger on exactly why that was. Let’s not dwell on it; let’s instead celebrate the above-average figure in 2024, those 59 openings that we’ve been looking at, 38% of the anticipated number.
Still nowhere near the 2019 result though, was it? Another way of looking at the numbers is the percentage of the total number of hotels and resorts in the pipeline that opened against the number that the chains anticipated would open. At 16%, 2019 again stands out as a great result, and the poor performance in 2020 to 2022 (6% to 7%) can surely be attributed to the added headwinds from the COVID-19 pandemic.
According to Lodging Econometrics (LE), the global pipeline at the end of 2023 was about 15,200 hotels, and about 2,000 properties opened in 2024. That’s 13% actualization as a percentage of the pipeline. For Africa, the figure was 11% last year, so we weren’t so far away from the industry average, were we?
The chains are scheduled to open 304 hotels and resorts this year and next, which is 100 up on their expectations for 2024 and 2025, and three and a half times what actually opened in the last two years. It’s surely good to be optimistic about growth, but when one considers that (according to the data that the chains themselves provide) some 20% of those hotels that are due to open by the end of 2026 are not yet under construction, that optimism may be just a tad over-egged?
Let’s look at where the real issue lies. Using LE’s global figures, I estimate that there were 15,820 hotels in the global pipeline at the end of 2024. Assuming that there are deals signed in 150 countries worldwide (out of about 200 in total, depending on how you count), that’s some 100 per country. The figure in Africa is just over 10 per country. Just not enough!
More deals = more openings. Keep signing!
Trevor Ward is managing director of W Hospitality Group and chairman of Hotel Partners Africa.
This column is part of ISHC Global Insights, a partnership between CoStar News and the International Society of Hospitality Consultants.
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