The African hotel industry is capable of generating market revenue of US$13,8 billion (R247,7 billion) by 2027, according to the UN Conference on Trade and Development.
However, getting finance in the industry is beset with difficulties. The volatility of currencies of African states combined with unreliable government provision of basic services and lenders fears of social, political and economic instability, mean that where finance is found, it is attached to high interest rates and short loan tenures.
Rosemary Anderson , FEDHASA Chair, told Travel News that one of the greatest challenges was the mismatch between financing and revenue currencies.
Most hotel developments secure financing in international currencies, while their revenues are predominantly in local currencies. This leaves developers vulnerable to significant local currency devaluations against the loan currency, making it difficult to service debt.
Furthermore, lenders build in provisions in the form of less favourable loan terms for higher-risk developments as protection against perceived risks, such as currency collapse or the impacts of economic, social and political instability.
