African hotel rates fall nearly 20% year-on-year, mid-range sectors hit hardest – Lighthouse Market Outlook

AFRICA – Hotel revenue management company Lighthouse has found that average hotel rates across Africa have dropped by almost 20% year-on-year, largely driven by significant contractions in the three- and four-star markets.

Key markets experiencing steep declines include Ethiopia, Kenya, Botswana, and Mauritius.

Lighthouse’s Q4 2025 Market Outlook analysed data from nearly 70,000 hotels in 185 countries.

Across Africa, the rolling 12-month average rate fell from US$201.19 (R3,250) in August 2024 to US$161.28 (R2,766) by August 2025.

Ethiopia saw the sharpest decline of 31.1%, followed by Kenya at 26.6%, Botswana at 22.2%, and Mauritius at 15.2%. South Africa’s rates contracted only marginally by 0.2%.

The drop was most pronounced in three- and four-star segments, which declined 23% and 15%, respectively.

Luxury five-star properties remained broadly stable, with rates averaging mid-US$350s (R6,000).

Lighthouse Director of Hospitality Research Blake Reiter explained this as a “two-speed market,” with luxury hotels maintaining rates due to resilient high-net-worth demand, while mid-tier hotels face pressure from currency volatility, inflation, and visa restrictions impacting intra-African travel.

Budget-conscious international travelers opting for value-driven alternatives like short-term rentals also intensified downward pressure on mid-range hotel rates.

Looking ahead, there is optimism for recovery: in South Africa’s Cape Town, Q4 advertised rates are 26% above 2024, and Johannesburg rates are up 23.6%, supported by events such as the G20 Summit.

The hotel industry across Africa has reacted proactively to the nearly 20% decline in average hotel rates, particularly in the three- and four-star segments.

Many hotel operators are accelerating investment in upscale and luxury properties to capture the resilient high-net-worth clientele less affected by economic pressures.

There is a growing emphasis on leveraging technology such as dynamic pricing and personalized marketing to optimize revenue and attract discerning travelers.

Hotels are also enhancing guest experiences with value-added services and flexible terms to retain customer loyalty amid economic challenges.

To counter visa restrictions and intra-African travel barriers, industry players advocate for policy reforms to stimulate business and leisure travel within the continent.

Additionally, operators are diversifying offerings and developing alternative accommodation formats, including serviced apartments and branded short-term rentals, to cater to value-conscious travelers.

Despite current rate pressures, industry optimism remains for recovery, especially in key urban centers like Cape Town and Johannesburg, driven by event-related demand such as the G20 Summit.

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