PwC Hotel Outlook for Tanzania positive despite flat 2017

11 Jul 2018 - by Staff reporter

After a low 2017, PwC predicts a bright future for Tanzania’s hotels.

Tanzania’s hotel sector looks positive, according to the PricewaterhouseCoopers (PwC) report, ‘Hotels outlook: 2018-2022: South Africa – Nigeria – Mauritius – Kenya – Tanzania’.

In the report, which was presented in Johannesburg on July 5, PwC noted a decline in hotel revenue and occupancy throughout 2017. “In 2016, the government introduced an 18% VAT on tourism services and increased the visa charge for business travel to US$200. In July 2017, fixed-rate concession fees were introduced for hotels in the national parks – some as high as US$59 per person per night.”

PwC believes these additional taxes led to a drop in guest nights, contributing to a 5.5% decrease in room revenue. This also follows a very successful 2015 and 2016 in which room rates rose by 22% and 7.7% respectively. The organisation notes that the VAT increase has now been “more or less absorbed”. While some hotels are still recovering from the increase, the industry is strengthening with a number of new flights added over the last year and new aircraft purchased by the national carrier. Additionally, Tanzania Tourist Board and Air Tanzania have teamed up to promote tourism to the country.

However, despite a flat 2017, the long-term outlook is more positive, with new hotels in the pipeline expected to contribute an extra 900 rooms by 2019. Large international hotel brands like City Lodge, Hyatt Regency and Ritz-Carlton expect to open hotels over the next two years.

Occupancy Rates. Credit: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates.

PwC notes that Tanzania’s GDP is expected to grow at an average of 7%, compounded annually, over the next five years. Basheena Bhoola, Associate Director at PwC South Africa, said: “Tanzania is one of the fastest growing economies in the world.”

PwC predicts that hotel occupancy will increase from 53.4% in 2017 to 58.5% in 2022. This will lead to a room revenue growth of 9.1% compounded annually, translating to US$319 million in revenue by 2022.