Hotel Market Study

We recently conducted a hotel market study of Accra in Ghana

HTI Consulting recently conducted a hotel market study of Accra in Ghana. The hotel market study showed a city undergoing change, driven by investments in new, international standard quality hotel supply. The hotel market study indicated that in 2008, the Accra market achieved an occupancy above 80%. Since 2008, supply has increased at a faster pace than demand, resulting in a continued decline in occupancy.

In analysing the occupancy and ADR in the Accra market, the hotel market study indicated that occupancies and ADR remained fairly strong until 2014. However, the combined effects of the Ebola virus and a slowdown in economic activity had a strong impact on the hospitality and market occupancy of properties within the hotel market.

The relative slowdown in demand due to the oil crisis impacting key business partners, combined with the strong increase in supply, affected the level of occupancies in 2016, and the hotel market study conducted indicated that occupancy declined by an additional 6,8 pts over the period. On the other hand, the hotel market study also revealed a 22,4% increase in the rooms sold in 2016, indicating a positive growth in demand for hotels in the city.

The positive growth in demand has continued into 2017. The hotel market study also showed that that the growth in demand translated into a growth in occupancy in 2017, with occupancy rising above 60% over the period. The rooms sold increased by almost 14%. The upswing in the Accra market is being driven by recovering economic growth and a recovery in oil prices which, in turn, is driving greater demand from the oil, as well as other, sectors.

The hotel market study highlighted that despite positive occupancy growth, rates have come under pressure in recent years. In 2016, the new entrants to the market, coupled with aggressive pricing strategies of the 5-star hotels, forced hoteliers to compromise on their rates, which led to a decline in ADR of USD 28,90 (13,9%). The year 2017 showed a similar trend with a decline in ADR of 3,2% compared to 2016.

While the growth of demand bodes well for the future performance of hotels, the authors of the hotel market study anticipate pressure on the rates going forward, given the aggressive pricing strategy of leading 5-star hotels and the expected entry of the Marriott and Hilton Garden Inn into the market.