Africa’s hotel pipeline surges as investors target sub-Saharan growth
“We're witnessing clear market signals across sub-Saharan Africa indicating significant expansion opportunities, particularly with the sector's potential to generate $168 billion in revenue and create over 18 million jobs by 2033,” says Daniel Trappler, senior director of development for Southern and Eastern Africa at Radisson Hotel Group.
Zimbabwe emerges as key growth market
Trappler believes Zimbabwe will emerge as the region's biggest growth story.
"Major hotel deals are taking shape across Victoria Falls, Harare, Bulawayo and Mutare as the country sheds its reputation as an expensive, politically troubled destination.
"By slashing prohibitive tourism fees and investing in infrastructure upgrades, Zimbabwe is making its world-class attractions accessible to a broader market while attracting sustainable hospitality investments.”
Zanzibar's untapped potential draws investor focus
Zanzibar represents another undersupplied market ripe for investment. "Despite growing demand from Eastern Europe and the United States, hospitality brands are only just beginning to enter," notes Trappler.
Recent data validates this assessment, with the island welcoming over 105,000 visitors in August 2025 alone, representing a 46% surge in international arrivals. With occupancy rates at 88.5% and visitors staying an average of 8.2 days, the supply-demand imbalance creates opportunities for hotel brands to capitalise on this expanding market before competitors establish footholds.
Kenya and South Africa drive diverse regional growth
Trappler identifies similar supply-demand imbalances in South Africa and Kenya, where both markets are attracting interest across business, leisure and MICE tourism segments.
Market statistics confirm his view, with Kenya's travel and tourism sector projected to contribute a record KSh1.2t to the economy in 2025 (24% above 2019 levels) while supporting 1.7 million jobs. South Africa shows a different but equally promising trajectory, driven by strong domestic spending at R445bn (3.8% above 2019).
Both markets reflect the broader African tourism renaissance, driven by natural beauty, cultural heritage, wildlife experiences, and strategic infrastructure investments that are positioning these destinations for sustained growth.
Development challenges persist
Trappler cautions that several challenges threaten this growth pipeline. Construction costs can spiral during development, while developers often struggle to secure proper financing or align their budgets with actual expenses. In remote or underdeveloped areas, basic infrastructure like utilities and proper zoning approvals can take years to secure, delaying project launches indefinitely.
The funding landscape adds another layer of complexity, with each market presenting unique challenges. Pension funds, for example, often finance entire projects directly, while South African developments typically require complex packages combining commercial banks, development finance institutions, and private investors.
Banks present the biggest hurdle, particularly in South Africa, since they prefer guaranteed lease income over the variable revenues that hotels generate. Unlike retail, office, or industrial properties with fixed rental agreements, hotels operate on management contracts with fluctuating annual returns, making debt repayment unpredictable from a bank's perspective.
To address financing challenges, some developers and hotel operators are using performance guarantees, promising owners a minimum profit level for 10–15 years, which allows them to guarantee specific repayments to banks. “This bridging mechanism helps meet bank lending requirements while still providing growth potential,” Trappler explains.
Alternative approaches like sectional title ownership schemes and serviced apartments are also gaining traction, offering structures that better align with both investor expectations and financing realities.
A continent poised for investment
“Sub-Saharan Africa is emerging as one of the world's most dynamic hospitality markets, but success demands market-specific strategies,” Trappler observes. "Each destination presents distinct challenges and opportunities requiring flexibility, strategic partnerships, and long-term vision from developers and brands."
He concludes: "This isn’t just a hotel development pipeline; it’s the creation of economic engines. With Africa's urban population set to double by 2050, each new hotel becomes a vital hub for job creation, a gateway for foreign investment, and a tangible stake in the continent’s future."