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What the future holds for hospitality industry

Monday January 16 2017
hoteli

Kigali is among African cities where accommodation rates for high-end hotels are astronomically high. PHOTO | CYRIL NDEGEYA

Air fares, hotel rates, security and accommodation listing platform Airbnb are key factors that will shape the hospitality industry performance in many African markets.

A new forecast for travel outlook for 2017 released by international consulting firm Advito says business fares will rise, but economy fares will remain flat. It adds that Airbnb will gain market shares from hotels while security will be the number one driver for hotel buyers.

Kigali has been cited among African cities where accommodation rates for high end hotels are “astronomically high.”

Happy Tours Ltd chief executive Jean d’Amour Nzamurambaho told Rwanda Today the expensive hotels in Rwanda are a challenge to the travel industry. He added that $60 rooms in Kigali go for $30 in neighbouring countries.

Last year, international hotel chains opened local hotels that are expected to increase luxurious accommodation services.

“With few good quality hotels outside the South African market, rates are astronomical in cities such as Accra, Kigali, Luanda and key business centres in Nigeria,” says the report.

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According to Mr Nzamurambaho, high hotel rates reduce number of tourists and business travellers.

But other players in hospitality sector believe rates could go down with the entry of new hotels in the local market.

“This will enhance hotel services and the supply side in Kigali,” said Frank Mustaff, Rwanda managing director of Horwath HTL, an international hospitality consulting firm.

“I am looking forward to an adjustment in rates but also to more flexibility and the creation of packages,” he added.

According to official data from RDB, Kigali targets to increase the number of hotel rooms from 8,000 currently to 13,800 in 2017.

On airline transportation, Advito predicts economy fares in Africa to range between -1 per cent and one per cent for intercontinental routes, while regional fares will remain the same. Business fares will increase by just one per cent on all flights to all regions except Asia, where they will be flat.

According to Mr Mustaff, business travel and tourism would need lower fare rates, yet they are still high in Africa.

Meanwhile, the online accommodation listing platform Airbnb is gaining popularity in the African market and in local hospitality sector as travellers shun hotels for private homes.

Last year, RDB said it was looking to standardise home rental services as it is becoming a sub-sector in hospitality.

“It is too early to predict the year outlook but high rates of accommodation and increased airline rates affect negatively travel industry,” said the founder of Happy Tours Ltd.

Travel agencies’ business model is based on commission for services such air ticketing, accommodation booking, transportation and more travelers are looking for discounts.