Strong demand fundamentals to improve 2018’s hotel performance

Following a peak in the economic and hotel demand cycle in 2014, supply growth in East Africa has been at an unprecedented high level during the past three years. Demand fundamentals have been strong in a region which has experienced the highest level of economic growth in Africa in recent years.

Yet supply growth, with the entrance of many global hotel operators, has outpaced demand in many markets. However, the hotel development pipeline has now reduced which will allow hotel performance to recover. Hotel investment in East Africa has been driven by local private investors with access to prime land and lending capacity off their diversified balance sheets. JLL is seeing increased interest in acquisition opportunities in the region by foreign investors as the sector is maturing rapidly.

International branding has increased significantly during the past five years, and new supply is, by global standards, generally of investment grade quality. JLL is expecting the coming years to see an increasing level of hotel conversions to international brands as owners seek broader distribution, while the budget and mid-market segments offer the best development returns in the medium term.

Read more here: JLL – East Africa Hotel Market Overview April 2018