Addis Ababa — The Ethiopian capital, Addis Ababa and headquarters of the African Union, has been shown to have the most expensive hotel room charges on the continent.
Addis will host the upcoming Africa Hotel Investment Forum (AHIF), taking place at the end of September. Research firm STR Global, recently carried out a comparative survey on room charges for one night across Africa, with the result that Johannesburg in South Africa offered the some of lowest charges.
The average rate in US dollars for a hotel room in the first six months of this year in Addis Ababa was $231.78/ night.
This compares with $215.75 for a room in Lagos, $144.76 in Nairobi, $122.30 in Cape Town, $105.73 in Casablanca, $103.54 in Cairo, $72.90 in Johannesburg and $70.70 in Sharm El Sheikh. Sharm El Sheikh is in the Sinai Peninsula of Egypt.
The survey reads in part, ‘When one notes that the price of a hotel room in Nairobi is almost double that in Jo’burg and the room rate in Addis is 60% more expensive than Nairobi, one is tempted to ask how prices can be so different.’
Thomas Emanuel, Director of Business Development, STR Global, said last week, “A great deal of the reason for the difference in rates across major African cities is simply supply and demand.”
He said Addis Ababa has a shortage of top quality hotels. “However, with the Ethiopian economy growing at a rapid rate of more than 10% per annum for the whole of the last decade,” he said.
The survey states that with more conferences coming to the city by virtue of its status as the seat of the African Union and with Ethiopian Airways on a similar growth trajectory to the country, and thanks to new routes and increased passenger numbers, there is a high demand for premium hotel rooms,
By comparison, Johannesburg is a long-established, sophisticated international city, with a large number of 5-star hotels and a competitive market for accommodation.
However according to STR Global, hotel prices have changed over the past year (between June 2014 and 2015).
There have been substantial rate rises in Sharm El Sheikh, up 42.5%, Addis Ababa, up 14.9%, Johannesburg, up 11.0% Cape Town, up 10.8% and Cairo, up 10.6%. Even though there has been a recovery in Lagos up 5.8%, in Nairobi it is broadly the same but Casablanca has suffered a 4% decline.
The increases in Sharm El Sheikh and Cairo can be explained as a recovery in tourism to Egypt, following several years of political unrest.
Cape Town’s improvement is due predominantly to increased demand and no recent increases in supply since the 2010 World Cup.
In the face of the recent terrorism incidents in Kenya, Nairobi’s hoteliers have chosen to maintain rates, but they have suffered with lower occupancy.
he rise in room rates in Lagos is simply due to supply and demand because there has been a combination of factors that would normally be expected to exert a downward pressure on price.
First, there is a hotel development boom in Lagos with 3,611 new hotel rooms in the pipeline, according to W Hospitality Group.
Second, there has been a collapse in the oil price, which is damaging Nigeria’s heavily oil-dependent economy and third, occupancy has fallen below 50%.
The rate decline in Casablanca is due in part to economic weakness in France, its major source market and in part to currency fluctuations.