Prime News Ghana

Hospitality sector offers investors high promise—Osório

By Justice Kofi Bimpeh

Investment in hospitality-related real estate presents a unique opportunity for investors to strategically position themselves to benefit from post-COVID-19 expected growth in the hospitality sector in Ghana, despite the prediction of a year-long aftershock.

Given the impact of the current pandemic on the tourism and hospitality and real estate sectors, many are worried that there will be another financial crisis, similar to that of 2008, that will impact confidence in real estate.

Indeed, some banks in Europe have instituted measures that require up to 40 percent deposit or equity for a new mortgage to be approved.

Some workers have been made redundant, and this will significantly impact on individuals’ abilities to pay rent and mortgages.

Jorge Osório, the Group Sales and Marketing Director, Devtraco Group—a leading real estate company—writing for Business24 notes that these present challenges make investing in the hotel market an ideal option.

“This is the best time to invest [in the hospitality industry] precisely on the back of the current economic recession. According to a report that we have just received from HTI Consulting, our preferred partner in feasibility studies when it comes to hospitality, and data gotten from STR, a global hospitality data analytics firm, the average annual international hotel occupancy rate in Accra grew 22 percent between 2016 and 2019 and stood at 66 percent.

“This growth [was] despite the increased number of hotels in Accra, like Kempinski, Marriott, Kwarleyz, and Ibis’ rebranding. Average daily rates in Accra, for the same period, increased by 23 percent, from GH₵714 to GH₵877, and the average revenue per available room (RevPAR) increased by amazing 55 percent to GH₵ 578,” he noted.

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The high demand for few existing quality international hotels portends a vibrant sector post-COVID-19 that will yield good returns to those who invest now.

Mr. Osório adds that: “First and foremost, there are different kinds and sizes of hotels, from small boutique establishments to global hotel chains. As such, a hotel investment may not be as out of reach or beyond your budget as you might think, especially through a smart investment.

“Unlike other types of commercial real estate, like residential property or retail spaces, hotels can adjust their room rates daily. There is no fixed medium- to long-term lease: each night is an opportunity to increase revenue by raising prices to match demand.

“Although this means that the hotel industry is usually one of the first to suffer in an economic downturn (as is the case presently), it also means that it has the capacity to recover quicker than other industries.”