Africa's tourism sector is boasting its largest-ever hotel development pipeline with 675 hotels and resorts, totaling 123,846 rooms, currently under construction, an increase of 18.6% year-on-year.
The expansion comes as international arrivals across the continent surge by 8% in 2025, the strongest growth globally, according to UN Tourism, which estimates Africa will receive some 81 million tourists by 2025.
As travel demand to key leisure and business destinations strengthens, hotel development is accelerating to relieve increasing pressure on accommodation supply.
Tourism recovery expands hotel pipeline
Africa's record tourism performance is increasingly reflected in its accommodation sector, with hotel development increasing in established cities, safari destinations and emerging urban markets.
UN tourism data shows the continent is leading global regions in visitor growth, putting sustained pressure on existing hotel stock and spurring new investment in accommodation infrastructure.
The result is a broad-based expansion of hotel development activity rather than isolated market growth.
Growing demand reshapes tourism investment landscape
While tourism demand continues to grow, the profile of investors financing new hotel developments is changing in many Southern and Eastern African markets.
Local and regional capital is playing a larger role in financing housing projects, especially through institutional investors such as pension funds.
“We are not seeing an influx of global capital into African hospitality. Investment in the sector is driven by local and national players within their own countries,” says Daniel Trappler, senior director of development for Southern and Eastern Africa at Radisson Hotel Group.
He further said that institutional partnerships are increasingly equity-driven.
“The investor landscape has moved more towards pension funds and institutional money, which is only equity and no debt.”
Pension funds expand investments in hospitality properties
Throughout the Southern African Development Community (SADC), pension funds are gradually increasing allocations to alternative assets as part of broader diversification strategies.
The research from Intellidex, commissioned by Financial Sector Deepening (FSD) Africa and SAVCA, highlights sustainability, diversification and risk-adjusted returns as key investment priorities for regional pension funds.
In this context, hotels are being viewed with a long-term investment horizon, given their ability to generate stable income after operations.
Institutional investors active in hotel development
A number of pension-supported institutions are already participating directly in hospitality-related developments across the region:
• Tanzania's National Social Security Fund is developing two hotels
• The National Pension Scheme Authority of Zambia has a hotel in Livingstone
• South Africa's Municipal Employees Pension Fund owns and operates a hotel at OR Tambo International Airport and is developing another hotel in Mpumalanga
These projects reflect the growing overlap between tourism infrastructure development and institutional investment strategies.
East Africa leads hotel construction activity
East Africa remains the most active region for hotel development on the continent, with approximately 80% of planned rooms already under construction in each of Kenya, Ethiopia and Tanzania.
“This is a significantly higher actualization rate than the continental average and a sign that announced projects in the region are moving from paper to reality faster than elsewhere,” Trappler says.
This momentum reflects continued tourism recovery and strong demand in both urban centers and safari-driven markets.
New tourism destinations emerging across Africa
Beyond established destinations, new growth markets are emerging as tourism demand expands and accommodation gaps become more visible.
In Zimbabwe, Harare is attracting attention due to limited international branded hotels with conference and event facilities.
“Pension funds in the country are sitting on significant capital and are looking to deploy it, and they are increasingly seeing a gap in Harare's hotel market,” says Trappler.
Victoria Falls is benefiting from strong leisure and MICE demand, while Bulawayo is emerging as an underserved business travel hub.
Zanzibar is also gaining popularity as a resort destination, with widespread investment interest in Tanzania, Kenya and Morocco over the next three to five years.
Hotel development is expanding along with tourism demand
As tourism demand continues to grow, hotel development is expanding in Africa's key markets, with increased activity in both primary and secondary cities.
Across the continent, operators are responding to changes in structural demand by adding capacity in high-growth destinations, where occupancy trends and future travel demand remain strong.
Recent developments in South Africa's coastal and business centers reflect this broader trend, particularly in secondary city markets where demand for branded accommodation continues to grow.
Africa's tourism recovery is now translating directly into infrastructure expansion, with hotel development accelerating in many markets as visitor numbers and travel demand continue to rise.
The result is a continent-wide shift in accommodation capacity, shaped by both tourism development and evolving investment frameworks that support long-term growth.
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