Global professional services firm PWC released its report “African insights Hotels outlook: 2017–2021” that provides an overview of how the hotel industry in South Africa, Nigeria, Mauritius, Kenya, and Tanzania is expected to develop over the coming years.
It also details the key trends observed and discusses the challenges facing the sector as well as it’s future prospects.
PWC forecasts a slowdown in tourism arrivals in Tanzania in 2017, following the introduction of VAT in tourism services and poor infrastructure.
“The imposition of an 18% VAT on tourism services in 2016, with the proceeds used to improve infrastructure, was expected to reduce foreign tourism in the short run and lead to a drop in stay
unit nights. This did not happen as many tourists had booked their holidays before the VAT was introduced. Tourism actually increased in 2016 and stay unit nights held steady. In early 2017, however, the market appears to be weakening and we expect a drop in stay unit nights this year,” the report reads.
In relation to the infrastructure, PWC reminds that poor roads, particularly to national parks, and power outages and power shortages have an adverse effect on the tourist experience.
Tanzania Tourism Outlook: 2017-2021
PWC estimates that improvements in basic infrastructure and the upgrade of the Tanzanian national air carrier Air Tanzania and of regional airports should help the tourism sector in the long run.
The report also reminds that over the next five years, five new major hotels are scheduled to open—three in Dar es Salaam and one each in Zanzibar and Serengeti— adding nearly 800 rooms.
PWC estimates a growth in available rooms of 2.0% compounded annually with the number of available rooms increasing from 7,700 in 2016 to 8,500 in 2021, and projects guest nights to rise from 1.6 million in 2016 to 1.8 million in 2021, a 2.4% compound annual increase.
PWC projects the average daily rate of hotels (ADR) to increase from USD140 in 2016 to USD 174 in 2021, and total room revenue to expand by 6.9% compounded annually, rising to USD 371 million in 2021 from USD 224 million in 2016.
Tourism is the largest industry in Tanzania, accounting for more than 17% of GDP.