Addis Ababa has highest hotel prices in Africa

If you thought hotel prices in your city are high, just wait a minute. A new survey is showing that Addis Ababa, Ethiopia has the highest hotel price point in Africa.

The survey by hospitality research firm STR Global released ahead of the Africa Hotel Investment Forum (AHIF) to be held at the end of September, has revealed that Addis Ababa is the most expensive place to spend the night.

In a press release issued today and copied to ghanabusinessnews.com, the survey indicates that the average rate in US dollars (constant currency) for a hotel room in the first six months of this year in Addis Ababa was $231.78 per 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,” it said.

Explaining the reason for the price differences, Thomas Emanuel, Director of Business Development, STR Global, says: “A great deal of the reason for the difference in rates across major African cities is simply supply and demand.”

The survey notes that Addis Ababa has a shortage of top quality hotels. However, with the Ethiopian economy growing at a rapid rate of more than 10 per cent per annum for the whole of the last decade, 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, due 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 five star hotels and a competitive market for accommodation,” it adds.

According to the survey, looking at how hotel prices have changed over the past year (year to date June 2014-2015), there have been substantial rate rises in Sharm El Sheikh, up 42.5 per cent, Addis Ababa, up 14.9 per cent, Johannesburg, up 11.0 per cent, Cape Town, up 10.8 per cent and Cairo, up 10.6 per cent.  Whereas, there has been a recovery in Lagos, up 5.8 per cent, whilst Nairobi is broadly the same and Casablanca has suffered a 4.0 per cent decline.

The increases in Sharm El Sheikh and Cairo, the survey states, 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.

“The rise in room rates in Lagos cannot be explained simply by 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 per cent.  The rate decline in Casablanca is due in part to economic weakness in France, its major source market and in part to currency fluctuations,” the survey says.

By Emmanuel K. Dogbevi