ei Report: Cameroon Hotel Market

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1 Cameroon has had a stable political environment - Paul Biya, the current leader, has been in power since The country has also seen relatively stable economic growth since the early 2000s, however, the economy is experiencing a slowdown due to decreased oil production and lower oil prices. Political and Economic Context Cameroon has seen relative political stability since its independence in The country s natural resources include oil and gas, high value timber, minerals, and agricultural products while GDP has been growing at an average rate of approximately 5 per cent from 2000 to Cameroon experienced a slowdown in 2016, when GDP growth dropped by more than one percentage point from the previous year This was largely due to significantly slower growth in oil production - 3 per cent in 2016 versus 37 per cent in Economic recovery is expected in 2018 as oil prices regulate and the government continues its ambitious infrastructure plan to improve the country s agricultural and forestry sectors. 40% 30% 20% 10% 0% -10% GDP Growth Rate for Cameroon ( , versus Cote d'ivoire & Nigeria Cameroon Cote d'ivoire Nigeria Source: World Bank This growth, compared to other major economies in the region - Cote d Ivoire and Nigeria - has remained largely stable, compared to the fluctuations in the other two countries from factors such as the civil wars in Cote d Ivoire from 2002 to 2007, and 2010 to 2011, and the milestone 2005 agreement for lending nations in the Paris Club to eliminate Nigeria s bilateral external debt. Hotel Demand In Douala, demand is largely generated by corporates operating in oil & gas, telecoms, infrastructure and finance. In Yaoundé, demand is largely from national, and regional, meetings and conference source markets. Cameroon is an important member of the Central African Economic and Monetary Community, which gives it high visibility for hosting events and conferences, particularly in Yaoundé, the capital. Given the nature of these activities, and a lack of leisure tourist demand, the market is focused on the upper midscale to high end segments. Hotel Supply The entirety of hotels with at least a three-star rating in Douala number 22, with more than 2,000 rooms and suites. There are five major hotels in Douala with c. 850 rooms and suites. In Yaoundé, the major hotel of relevance is the 257- room Hilton. It was opened in 1989 and is owned by the government. The Hilton Yaoundé is the only five-star hotel in the city, and in the country. Market Performance Average room occupancies are estimated between 60% and 70%, and average room rates at the high-end between US$150 and US$160. Average room rates have not seen much upward movement in the past couple years, without the entrance of significant new supply or the upgrading of the older existing ones. 1

2 Major Hotel Districts in Douala Major districts within Douala, the commercial capital of Cameroon, include Bonanjo - home to administrative and commercial buildings, Bonapriso - a district for diplomatic missions and high-end residential and Akwa - the commercial hub. The two international brands operating in the city are concentrated in the Bonanjo district. Location of Cameroon in Africa. Source: Google Maps AKWA DISTRICT Hotels: 7 Rooms: 587 Major Hotel: Akwa Palace OTHER DISTRICTS Hotels: 8 Rooms: 562 BONANJO DISTRICT Hotels: 5 Rooms: 830 Major Hotels: Pullman, Ibis and Hotel Sawa BONAPRISO DISTRICT Hotels: 2 Rooms: 110 Major Hotel: Star Land Hotel Source: ei Database, Google Maps 2

3 Major Hotels in Cameroon There are currently only three internationally branded hotels in Cameroon - the Pullman, Ibis and the Hilton Yaoundé - and there are other high-end hotels owned by local investors. The latest major addition was the Star Land Hotel, which opened in PULLMAN HOTEL HOTEL SAWA STAR LAND HOTEL City: Douala City: Douala City: Douala Rooms: 144 Rooms: 291 Rooms: 70 Good to know: Used to be branded as Le Meridien (and rated 5-star) until the rebranding in It is currently in need of renovations. Good to know: Largest hotel in the market, branded as a Novotel until Now independently managed and in need of renovations. Good to know: Newest hotel in the market. Independentlymanaged, but is the bestperforming hotel in Douala in terms occupancies. AKWA PALACE HOTEL IBIS HILTON YAOUNDE City: Douala City: Douala City: Yaounde Rooms: 184 Rooms: 160 Rooms: 255 Star Rating: 3 Star Rating: 5 Good to know: One of the older hotels, used to be branded as a Pullman but is now managed independently. Good to know: A quality budget business hotel. Offers value for money and captures substantial market share. Good to know: The only 5-star rated hotel in the country with the highest achieved average room rates room and occupancies in Yaoundé. 3

4 Market Outlook and Pipeline There are at least 600 branded rooms are in the development pipeline, planned to come into supply over the next three years. These projects are all located in Douala, however we foresee low completion rates due to various factors, such as high capital costs. Market Outlook Although there has been a substantial pipeline of hotels for Cameroon, actual completion has been tough to achieve. Unlike other regional markets such as Nigeria and Cote d Ivoire that have seen political upheaval and sharp spikes and decreases in economic growth, Cameroon s constant, growth ranging between 4 5% in the last few years has likely not supported a compelling case for significant increases in hotel development. There have not been adequate catalysts to spur the upgrading of existing supply, or the addition of new supply, and more importantly financing options have not been forthcoming. Additional reasons for the stall in the pipeline include the high capital investment required to build to international standards, the heavy reliance on importation, and limited access to raw materials. However, there has been a recent spate of projects announced, which is evident of a potential build-in supply, leading to the 2019 CAF Games. It also remains unlikely that many of the projects in the pipeline will be completed by 2019, however. What is likely to happen is that many of the existing hotels will receive much-needed renovations and/ or extensions, while those nearing completion, such as Djeuga Palace and Krystal Palace will be completed. The real development story will play out in 2020 (after the CAF Games), and the economy should have seen a recovery plus accumulated growth effects of the preceding years. Brand Group Positioning Hyatt Regency Hyatt International Number of Rooms Projected Opening Location Upper Upscale Bonanjo Radisson Blu Carlson Rezidor Hotel Group Upper Upscale Bonanjo ONOMO Hotel ONOMO Hotel Upscale 160 Unknown Bonapriso CityBlue Hotels & Suites CityBlue Hotels Midscale** 90 Unknown Site Unknown Total 600 Source: ei Database, W Hospitality Group. 4

5 Major Hotel Owners and Developers Hotels in Cameroon are predominantly owned by a combination of HNIs, family businesses and government agencies. AccorHotels Current owners of the 160-room Hotel Ibis after purchasing the property from Victor Fotso, the original developer. Samuel Foyou High net worth individual, and promoter & developer of Krystal Palace, a 250- room, 5-star hotel being built in the Akwa district of Douala. Société Nationale d Investissement du Cameroun (SNI) Government agency that owns many of the legacy hotels in the country, including the 739 rooms of the Hotel Sawa in Douala, and the Hilton and Hotel Mont Fébé in Yaoundé. Groupe Fadil An agro-industrial familyowned company, that have owned the 144-room Pullman Hotel since the property was privatized by the government. It owns the hotel under its subsidiary, Société Nouvelle des Cocotiers (SNC). Jean Claude Fetheu Owner of two high-end hotel properties in Yaoundé Djeuga Palace and Djeuga Aparthotel. He is also developing a 250-room hotel in the Bonanjo district. Groupe Sohaing Family-owned business that built the 184-room Akwa Palace in 1971, and have owned the property since. estate intel Limited Disclaimer 2017 estate intel Limited confirms that information contained herein were obtained from sources deemed to be reliable. While we do not doubt their accuracy, no legal responsibility can be accepted by estate intel Limited for any loss or damage resulting from the contents of this report. As a general report, this material does not represent the view of estate intel Limited in relation to particular properties or projects. estateintel.com NOVEMBER 2017