Windhoek has enormous potential

Despite social and economic challenges that derive from the past, Windhoek has enormous potential when it comes to growth in the tourism industry.

This is according to the recently launched African Hotel Valuation Index (HVI) report.

According to the report Windhoek as well as the rest of Namibia has immense social and economic inequalities dating from the apartheid era. The report indicated that in 2017 the hotel industry in Windhoek showed a significant value increase compared to the previous year when there was a moderate increase.

In 2015 the industry showed a significant decline.

Hotels in Windhoek had an occupancy rate of over 65% over the last three years and revenue per available room growth as well as a value growth of 9.3% in 2016.

“This year looks even more promising with an estimated occupancy of almost 70% and even though new hotel openings are adding to the supply of the market, revenue per available room is forecast to grow by 16% this year.”

It says adventure activities along the dunes of the desert and the coastline as well as a large amount of game have attracted a lot of tourists to Namibia. “Windhoek is a perfect starting point for a road trip across the country.”

In addition the report says major African companies are starting to look at Windhoek as a good place to do business. Windhoek has seen a growth in tourist arrivals each year and various hotel companies are looking to expand in Namibia.

The South African City Lodge Group is expected to open a Town Lodge in Windhoek with 151 rooms in 2017, the Hilton in Windhoek went through refurbishment, a 180-room mid-market Hilton Garden Inn adjacent to the existing Hilton in Windhoek is supposed to open and a multimillion-dollar phased refurbishment of Gustav Voigts shopping centre is also scheduled to happen in the centre of Windhoek.

Managing partner at HVS South Africa, a hotel valuation, consulting and brokerage firm, Tim Smith, says that in spite of the challenges of Ebola, the Zika virus, presidential elections slowing down economies, low oil prices and the threat of terrorism, 17 out of the 23 markets covered increased value in 2016.

In 2015, 10 markets out of 21 cities were growing; in 2016, 14 markets were on the rise and Maputo, Windhoek and Casablanca, among others, have shown an impressive recovery.

The HVI reports that most African countries now have a steady but realistic growth that investors can rely on when making investment decisions. Despite a more conservative outlook, GDP is much higher than many global economies.

“The future of hotel demand in Africa will follow a positive trend in the long term. Signs of recovery and improvement on 2016's relatively tough numbers are already up and most of these markets are continuing to grow, so we are expecting 2017 to be even better,” said Smith.

The report further added that according to the World Bank, according to the latest economic outlook (March 2017) the hotel and restaurant sub-sector in Namibia expanded by 5.9% in 2016 and is expected to grow further by 5% in both 2017 and 2018, which shows positive development for the hospitality industry.

The report indicates that the future of South Africa's tourism is looking promising as the rand has recently strengthened again and more than 2500 rooms are expected to be added over the next five years.

According to the report the African hotel industry will continue to face challenges in the short-term. However, the positive news is that international and African unions are working together to promote the future of tourism in Africa, connectivity is improving at a fast pace and many countries introduced e-visa and visa on arrivals in 2016/17.

“But restrictive visa conditions have broad economic consequences for the tourism sector.”

It also adds that accessibility is key for hotels' performance. Africa faces a challenge of lengthy and expensive flights to and from Africa and the lack of competition pushes air fares up significantly. On a positive note, Air France, Emirates and Lufthansa have increased routes to Africa in 2016, launching direct flights to an increasing number of African countries.

The HVI is a hotel valuation benchmark that monitors annual percentage changes in the values of typically four-star and five-star hotels in 23 major African cities.

Additionally, the index allows rankings of each market relative to an African average. The HVI also reports the average value per room in US dollars for each market.

ELLANIE SMIT