Hospitality industry said to reap returns in low oil prices
HTI Consulting, a South Africa-based hospitality and tourism consultancy, says Accra is doing well compared to other cities in terms of the adverse impact of low oil prices on tourism and hospitality.
A statement by HTI Consulting, which conducted a study on Accra, Lagos and Luanda, attributed Accra’s performance to the limited reliance on oil and the greater diversity of Ghana’s economy.
“Despite [Accra’s] recent economic challenges, a doubling in quality supply in the last five years and the impact of Ebola, both occupancy and average daily rates have remained strong,” Wayne Troughton, the CEO of HTI Consulting said, adding that the strong performance was significant given the depreciation of the cedi against the dollar..
He said while the run of low oil prices will affect tourism and hospitality across the continent, its impact will be mediated by various factors, and particularly, developers who commit to providing quality hotels with international standards and international branding, can still realise good returns.
“The level of economic diversity, the future pipeline for new hotel development and the length of time oil prices remain depressed, these all have a role to play in driving hospitality trends in West African countries.” Wayne Troughton, Chief Executive Officer of HTI was quoted as saying.
HTI Consulting’s study on Accra, Lagos and Luanda, found Angola’s capital Luanda to be the most affected city.
“Oil drives 90% of Angola’s exports and 80% of its tax revenue. The significant cut in both Government and oil related corporate spend has resulted in an annual occupancy decline of 20 percentage points and a reduction in Revenue Per Available Room of almost 52 per cent between 2014 and 2015.”
HTI however added that amidst the low prospects for investment opportunities in the short term, properties offering quality international standards were likely to maintain stronger performances than those with a “low quality to value ratio”.
On Lagos, Wayne Troughton highlighted that oil prices alone were not responsible for the dip in performance: “New, quality, internationally branded supply, Ebola and the failure of Government to appoint a cabinet immediately after the elections in 2015 saw occupancies decrease by 15 percentage points over a two year period.”
The CEO said occupancy growth in the short term is possible. The removal of the Ebola threat and increased government spending from cabinet appointments should drive a rebound in demand in 2016, although the market’s ability to absorb any new supply would remain questionable without an accompanying rebound in oil prices.
By Emmanuel Odonkor