Addis Ababa has highest hotel rate in Africa

A survey of prices of international grade hotels in selected major African cities has revealed that Addis Ababa is the most expensive place for a good night’s sleep
A survey of prices of international grade hotels in selected major African cities, produced by hospitality research firm STR Global, ahead of the Africa Hotel Investment Forum (AHIF), taking place at the end of September, has revealed that Addis Ababa is the most expensive place for a good night’s sleep.
The average rate in US$ (constant currency) 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.
When one notes that the price of a hotel room in Nairobi is almost double that in Jo’berg 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, says: “A great deal of the reason for the difference in rates across major African cities is simply supply and demand.”
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, 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, 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.
Looking at how hotel prices have changed over the past year (year to date June ’14-’15), 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%.
Whereas, there has been a recovery in Lagos up 5.8% whilst Nairobi is broadly the same and Casablanca has suffered a 4.0% decline.

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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.
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%.
The rate decline in Casablanca is due in part to economic weakness in France, its major source market and in part to currency fluctuations

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