This report provides an overview of the sub-Saharan African hotel sector. Following a review of current and projected demographic, political, regulatory and economic trends, the lodging markets of the ten sub-Saharan countries with the highest level of tourism industry receipts, according to the World Travel & Tourism Council (WTTC), are profiled and evaluated. In the following section, the penetration of hotel chains (both international and regional) in sub-Saharan Africa is examined. The final section offers some perspective on what to expect for the hotel sector in the region over the coming years, including a review of the development pipeline of new hotels by country.

Some key findings in the report include:

Major challenges face hotel owners in most of sub-Saharan Africa, particularly in terms of lack of adequate infrastructure and security. Nevertheless, hotel development is accelerating with the number of rooms in the pipeline up over 40% year on year as of the beginning of 2012.

Mauritius, a prime island beach destination, and South Africa offer the best business environment in the region for hospitality and tourism, according to the World Economic Forum (WEF), although the latter presents serious concerns regarding security. While Kenya is a well-established leisure tourism destination, it is rated worst in the world for security by the WEF.

Among the major international chains, Starwood is the best placed in sub-Saharan Africa, notably with a strong presence and pipeline in the key Nigerian market. Accor also has a strong presence, with over 5,000 rooms in the region, which are heavily concentrated in South Africa. Otherwise, InterContinental Hotels Group – IHG (about 2,240 rooms) and Carlson Rezidor (1,668 rooms) are the only other international operators to have significant capacity in the region.

There are three South African chains of significant size, including Tsogo Sun, Protea Hotels and City Lodge Hotels group, which have a combined total capacity in excess of 30,000 rooms, most of which are located in the home market. However, curiously, Tsogo Sun has very few projects in the growing pipeline of chain hotel development in sub-Saharan African countries outside of South Africa.

Lonrho, a conglomerate active in the agribusiness sector i Tsogo Sun in particular, is bringing low-cost lodging and air transport to Africa. The group has signed an exclusive master franchise agreement to develop easyHotels across the continent. The group has also launched fly540, the first budget airline in sub-Saharan Africa operating outside of South Africa.