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HVS In-Depth Africa Hotel Valuation Index:
There is something in Zanzibar that invokes paradisiac beaches and faraway destinations. Reality is many travellers want to explore its white sand beaches and blue water ocean. The economy and tourism on the island are booming. The archipelago showed a GDP growth of 7.9% in 2017 and a 15% increase in tourist arrivals.
Tourism is the fastest growing industry in Zanzibar boosted by large public investment to improve infrastructure and transport, promote the island as an investment destination and run international marketing campaigns. The increased airlifts from direct international flights boosted the number of tourist arrivals in 2017. El Al Israel opened a new air route from Tel Aviv putting Israel amongst the top five source markets. Mango Airlines flies direct to the archipelago from South Africa and Fly Dubai and Ethiopian Airlines increased the frequency of direct flights from Dubai and Addis Ababa respectively. Dar es Salam and Nairobi are very well connected with daily direct flights to the island. Zanzibar shows a 19% CAGR in arrivals from 2013 to 2017. Hotel’s values are up by 28% pushed by an increase in REVPAR and a better exchange rate.
The island has 455 properties of which 79% is in the economy and mid-scale segment according to the Zanzibar Investment Promotion Authority. However, the pipeline is focused on luxury with two big developments, namely the Zanzibar Amber Resort and the Fumba Town development, that include a Ritz Carlton and an Anantara and a strong uplift in luxury residential units. The new terminal at the Zanzibar International Airport is built and expected to open in 2019 although the development is currently on hold. It will accommodate an additional 1.6 million passengers and feature quality infrastructure. Values are expected to be up by 6% in 2018 driven by an increase in ADR and approximately 9% per year in 2019 and 2020 despite the increase in supply.
Change In Value For Market:
|Significant Value Increase:
|Greater than +10%
|Moderate Value Increase:
|Between +3% and +10%
|Between -3% and +3%
|Moderate Value Decline:
|Between -3% and -10%
|Significant Value Decline:
|More than -10%
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