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News Release

Johannesburg

Hotel brands eye up Dar es Salaam for expansion according to new report


The hotel market in Dar es Salaam is forecast to grow by 8% per annum between 2016 and 2020 as hotel brands target the city according to JLL's Dar es Salaam Hotel Market Outlook.

Hotel demand in Dar es Salaam is driven by its status as one of the main commercial hubs in East Africa and the gateway to a strong leisure offering in the rest of the country. The demand growth outlook is positive with continued economic growth, increasing regional trade and improving air access. Hotel performance was relatively strong in 2015 with market occupancy at 66% despite new supply entering the market.

Since 2000 hotel room supply in the quality segment has grown by 6% per annum with growth now expected to speed up. The total number of hotel rooms in Dar es Salaam is forecast to grow by 8% per annum between 2016 and 2020, with projects totaling 1,421 new keys having been announced. JLL expects that 80% of this supply will come to fruition meaning an increase of 1,137 keys.

Mark Dunford, Vice President of JLL's Hotels & Hospitality Group, Sub-Saharan Africa, commented: "Despite the opening of numerous new hotels in the city there is still room for additional quality supply, with annual occupancy rates in the market near the 70% mark. Hotel brands not present in the market see Dar es Salaam as a key target and the city should remain at the top of the investor target list in East Africa."

Internationally branded supply is expected to rise with six new branded hotels entering the market by 2020. Increased competition at the high end of the market is imminent, with Rotana opening a 254 key hotel in 2017, while the Tune hotel and City Lodge entering the market alongside the new Ramada Encore will create a strong midmarket base.

By 2020 Kinondoni is likely to have the highest hotel room supply with a total of 1,877 rooms, with the CBD close behind with a total of 1,708 rooms. With a new bridge to the south and an increased focus on budget assets catering to the domestic and regional business traveller, JLL predicts the area of Temeke is going to see an increase in supply given its proximity to both the airport and industrial area.

Dunford concludes, "The hotel investment outlook is positive for Dar es Salaam. Historically Tanzania has lagged behind Kenya with regards to development interest from international investors, yet with looming oversupply of hotel rooms in Nairobi, planned infrastructure improvements in and future gas industry developments in Tanzania, Dar es Salaam has caught the attention of groups who would have typically looked at Nairobi."