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News Release

Johannesburg

Global hotel brands target Addis Ababa, according new report


The number of hotel rooms coming onto the Addis Ababa market by global hotel brands will increase by 50% in the next five years according to JLL's Addis Abbaba Hotel Market Outlook.

Addis Ababa has experienced high demand growth in the past decade and benefits from a diversified demand mix driven by diplomatic, NGO and corporate travellers, with the leisure segment growing off a low base. Demand growth outlook is strong with high domestic and regional economic growth set to increase the size of the corporate market alongside the diplomatic and NGO segments. The expanding network and fleet of Ethiopian Airlines will continue to improve the status of Addis Ababa as an aviation hub with further hotel demand a necessary spin off.

Addis Ababa has seen significant financial outlay into the hotel sector in recent years, with a number of successful local entrepreneurs investing in hotels. Hotel investment is primarily driven by local capital with limited international capital entering the market. Bank lending is available yet limited to a small number of local institutions.

Announced new quality hotel supply amounts to 3,081 rooms, a growth of 98% on the existing 3,130 quality hotel rooms provided by the top 31 hotels currently operational. JLL anticipates that 50% of this or 1,540 rooms will enter the market in the next five years.

Mark Dunford, Vice President of JLL's Hotels & Hospitality Group, Sub-Saharan Africa commented: "Global hotel brands remain underrepresented in the Addis Ababa hotel market, but we see this changing significantly by 2020 with the market entry of numerous new brands."

Hotel performance is expected to come under pressure in 2017 and 2018 as new supply enters the market, such as the AU Grand Hotel with 330 rooms. Demand growth is anticipated at 8% per annum in the medium term which should be sufficient to absorb the additional supply, yet in the short term hotel performance will be impacted by new market entrants.

Dunford says, "The opening of new high quality internationally supply in Addis Ababa will further establish the city as one of the most important in East Africa and also increase its tourism appeal. Whilst short term hotel investment performance will be impacted by fluctuations in supply, Addis Ababa has a positive hotel investment outlook in the medium term due to its diverse demand drivers."