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Oil slump: Ghana’s hospitality industry ‘resilient’

  • SOURCE: | qwesa2big
  • 1.8814758HTI Consulting’s 2015 Hospitality Market Snapshot has revealed that the hospitality industry in Ghana’s national capital, Accra, remained “resilient” despite economic challenges ranging from bad power supply, rise in inflation and falls in the value of the cedi.

    The report, which gauged how the slump in oil prices on the world market affected the hospitality industry in oil-producing African economies: Ghana, Angola and Nigeria, said: “Within the last five years, quality hotel supply in Accra has doubled.”

    “Of the quality supply that entered the market between 2010 and 2015, Fifty-eight (58%) were internationally branded (Best Western Premier, Kempinski, Movenpick and Ibis Styles). Four-star supply dominates (56.0%), however, greater brand penetration at the three-star (13.0%) and five-star (24.0%) levels is evident.

    As far as future room supply is concerned, the report said of the 2,500 rooms planned in Accra, 31.0% are under construction, and 27.0% are in the advanced stages of planning.

    A further 42.0% of rooms planned are mooted, however, some of these projects could materialise in the longer term. An estimated 72.0% of the rooms under construction and in advanced planning have signed management agreements with international brands including Marriott and Hilton Garden Inn.

    The continued growth in supply, brand penetration and increased segmentation, is indicative of a market moving towards maturity, HTI Consulting said.

    In market performance and outlook, the report said occupancy and ADR in Accra have remained strong despite increased competition.

    In 2014, the impacts of Ebola and slower economic growth saw occupancies inch below 70.0% whilst ADR declined slightly. Occupancy and ADR remained stagnant in 2015, despite increased supply and the depreciation of the cedi against the dollar, highlighting the resilience of this market. Hoteliers envisage increased competition will result in rate stagnation in the medium term. Occupancies are expected to continue to grow gradually. “Accra represents a good opportunity market. Location, brand and positioning must be prioritised in this maturing market,” the report added.

    Economic overview

    Considering the recent discovery of oil in Ghana (2007), its economy is more diverse than those of Nigeria and Angola. Oil contributes 6.3% of GDP whilst the services sector contributes over 50.0%. Agriculture (which employs up to 45.0% of the work force) remains an important economic contributor.

    Despite the limited reliance on oil, the economy of Ghana has faced recent challenges. A severe energy crisis, an unsustainable external and domestic debt burden and depreciation of the cedi has seen growth slow from 7.5% in 2013 to an estimated 3.6% in 2015.

    Positive GDP growth is anticipated going forward with a projected 4.5% in 2016 and 6.0% in 2017. The extent that the economy grows will, however, be reliant on resolution of the energy crisis. The imbalance between demand and supply has had a significant impact on business growth. Government is taking pro-active measures to address the issue and it is hoped that from 2016, greater capacity will positively influence the economy.

    Inflation is also expected to reduce slightly in 2016. Inflation has increased from 9.2 % in 2012 to 17.0% in 2015. Price adjustments in petroleum and utilities as Government removed subsidies, as well as the sharp depreciation of the cedi have driven inflation upwards. From 2017 inflation is expected to be 12.0%.


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