Africa’s Hotel Industry: Growth and Development After COVID-19

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SAN DIEGO, California — Like many other industries, the hotel and tourism industry has been heavily impacted by COVID-19. Despite the pandemic still ongoing worldwide, surveys by HTI Consulting suggest that the hotel and tourism industry in Africa is poised for considerable growth following the end of the pandemic. Major companies in the industry took part in the HTI survey, such as Hilton, Marriott, Radisson Hotel Group and Accor Hotels. HTI Consulting CEO Wayne Troughton explained, “Despite current challenges and the overall uncertainty that trouble us all, there will be better times ahead and the travel market will eventually emerge stronger and more resilient.”

Reasons for Optimism

Although the pandemic has put a strain on hotels and tourism, the industry in Africa is hopeful, looking through the lens of long-term potential, which provides optimism for a few different reasons. The first and most notable reason is that the industry is banking on a large influx of travel once a sense of normalcy returns. Along with the anticipation of an impending travel boom, the well-regarded EHL School of Hospitality has stated that Africa holds a “unique joker up its sleeve” because of its younger generations, which have been described as learning through innovation and pragmatism as opposed to simply receiving investments.

The EHL School of Hospitality also noted that Africa’s population has valuable experience with navigating health crises. With this in mind, young people in Africa’s hospitality industry are exceedingly capable of adapting to changing times and thriving going forward.

Growth During COVID-19

Regarding the HTI surveys, optimism for the future of Africa’s hotel and tourism industry stems from the idea that once the pandemic ends and tourism picks up again, African hotels will have more capacity than they did pre-COVID-19. Close to 70% of the 219 hotel projects in the sub-Saharan region are on track as scheduled. Only 18% will be held back temporarily, and the remaining 13% are “on hold indefinitely.” Additionally, as of July 2020, there were 21 new projects for nearly 3,000 “new hotel rooms in 15 African countries.”

Once the pandemic comes to a close, Africa will have the ability to host thousands of more guests in hotels, making the most of a potential travel surge. Finally, COVID-19 shutdowns have provided hotel management companies with more time to negotiate deals with hotel developers, resulting in deals being closed quicker. This has helped increase the asset values and share prices of corporations that have suffered during the pandemic.

The Hotel Industry and Development in Africa

Considering the potential growth, those involved with Africa’s hotel and tourism industry have predicted the industry will help economic development. Between 2010 and 2020, the number of branded hotels in the African market had grown eight-fold. However, the impact of foreign investment in the tourism industry on the lives of the local population remains ambiguous. While studies on the effect are still scarce, the available research indicates that the industry positively impacts the number of jobs in the least developed countries.

On the other hand, foreign hotel owners rarely focus on training, and therefore, do not often improve the skills and quality of local workers’ jobs. On the positive side, initiatives for socially responsible and sustainable tourism are on the rise in various African countries. In fact, more than 65% of visitors were willing to pay more for “environmentally friendly hotels.”

Africa’s hotel industry growth demonstrates the value of prioritizing U.S. foreign aid. When USAID assists a community in need, people can lift themselves out of poverty and transform from working poor to becoming a middle and upper class as economic development continues. As a result, there is an increase in new consumers and a new market for goods and services. When this happens, the U.S. can trade with these newly developed economies, receiving a considerable return on investment. In this case, American companies such as Hilton and Marriott participate in the emerging markets by operating hotels, which helps both the American economy and the economies of the countries where the hotels are located.

In conclusion, Africa’s hotel industry and American companies’ roles demonstrate the benefits and potential of U.S. foreign aid. It can help alleviate poverty while also providing a return on investment.

Sean Kenney
Photo: Flickr

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