A surge in locally funded hotel developments is reshaping Africa’s hospitality sector, with South African pension funds emerging as influential players in a record-breaking pipeline that signals renewed confidence in the continent’s tourism economy.
Africa’s hotel pipeline now recorded 675 projects, now totaling 123 846 rooms, up 18.6% year on year, underpinned by a strong tourism rebound that saw international arrivals rise by 8% in 2025 to about 81-million visitors, according to UN Tourism.
Local and national players
Daniel Trappler, senior director of development for Southern and Eastern Africa at Raddison Hotel Group, said such growth would typically attract global investors but a different trend is taking shape across Southern and Eastern Africa.
“We’re not seeing global capital flowing into African hospitality. Investment in this region is driven by local and national players, within their own countries,” said Trappler.
“The investor landscape has moved more towards pension funds and institutional money, which is only equity and no debt,” he added.
Hotels no longer seen as volatile
Research across the Southern African Development Community supports this shift as it is explained that pension funds are increasingly targeting alternative assets such as private equity and real estate to achieve diversification and stronger risk-adjusted returns.
Hotels, once considered volatile, are now being reassessed as stable, income-generating assets over time.
South Africa offers a clear example of this trend in action as the Municipal Employees Pension Fund already owns and operates a hotel at OR Tambo International Airport and is developing another property in Mpumalanga, due to open later this year, both in partnership with Radisson Hotel Group.
Confidence in domestic tourism
These developments show growing confidence in domestic tourism and business travel, even as global capital remains cautious.
Tanzania’s National Social Security Fund is developing two hotels, while Zambia’s National Pension Scheme Authority owns a hospitality asset in Livingstone. Together, these investments point to a broader regional shift: African capital backing African infrastructure.
East Africa is currently leading the charge, with Kenya, Ethiopia and Tanzania converting close to 80% of planned hotel rooms into active construction, well above the continental average.
“This is a significantly higher actualisation rate than the continental average and a sign that announced projects in the region are moving from paper to reality faster than elsewhere,” said Trappler.
South Africa’s anchoring role
Even so, Southern Africa, and South Africa in particular, remains strategically important. The country’s more mature financial sector and deep pool of institutional capital position it as a potential anchor for further expansion, especially as secondary city markets gain traction.
Radisson’s planned Radisson Serviced Apartments Umhlanga, a 155-room development set for completion in 2029 in Durban’s Umhlanga Ridge, reflects this shift towards mixed-use and extended-stay offerings in established commercial hubs.
Harare ready for investors
In Harare, a shortage of internationally branded hotels with conference facilities is opening the door for new entrants, while tourism hotspots such as Victoria Falls and Zanzibar are drawing increasing investor attention.
“Pension funds in the country are sitting on significant capital and looking to deploy it, and the gap in Harare’s hotel market is becoming increasingly visible to them,” said Trappler.
Looking ahead, markets such as Tanzania, Kenya and Morocco are expected to see the strongest growth over the next three to five years, driven by a combination of tourism demand and available capital.
“We are at an inflection point. The capital is here, the demand is here, and the development is happening. Africa’s hospitality story is no longer one of potential. It is one of progress,” concludes Trappler.
- Africa's hotel development pipeline has grown to 675 projects with 123,846 rooms, up 18.6% year-on-year, driven by an 8% rise in international arrivals to 81 million in 2025.
- Local and national investors, particularly South African pension funds, are increasingly funding hotel projects, shifting away from reliance on global capital and focusing on equity investment without debt.
- Hotels are being redefined as stable, income-generating assets, attracting pension funds seeking diversification and better risk-adjusted returns in Southern Africa and beyond.
- East African countries like Kenya, Ethiopia, and Tanzania lead with nearly 80% of planned hotel rooms under construction, while South Africa remains a key financial anchor with mature institutional capital and expanding secondary markets.
- Emerging markets like Harare, Victoria Falls, and Zanzibar are gaining investor interest due to hotel shortages and tourism growth, with Tanzania, Kenya, and Morocco expected to see the strongest hospitality sector growth in the next 3-5 years.
A surge in locally funded hotel developments is reshaping Africa’s hospitality sector, with
Africa’s hotel pipeline now recorded 675 projects, now totaling 123 846 rooms, up 18.6% year on year, underpinned by a strong tourism rebound that saw international arrivals rise by 8% in 2025 to about 81-million visitors, according to UN Tourism.
Daniel Trappler, senior director of development for
"We're not seeing global capital flowing into African hospitality. Investment in this region is driven by local and national players, within their own countries,” said Trappler.
"
Research across the
Hotels, once considered volatile, are now being reassessed as stable, income-generating assets over time.
Tanzania’s National Social Security
East Africa is currently leading the charge, with
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Even so,
Radisson’s planned Radisson Serviced Apartments
In Harare, a shortage of internationally branded hotels with conference facilities is opening the door for new entrants, while tourism hotspots such as Victoria Falls and Zanzibar are drawing increasing investor attention.
"Pension funds in the country are sitting on significant capital and looking to deploy it, and the gap in Harare's hotel market is becoming increasingly visible to them," said Trappler.
"We are at an inflection point.
