A new report by UN Tourism has revealed, while investor appetite for Africa’s tourism and hospitality sector is growing rapidly, the continent’s biggest hurdle remains turning ambitious ideas into bankable, investment-ready projects.
The findings, presented at the Future Hospitality Summit in Nairobi, highlight strong demand for tourism investment alongside persistent structural and financing constraints.
Laura Garcia, Senior Project Specialist representing UN Tourism Investment Services, said: “There is strong interest in African tourism but projects must be better structured with clear risk mitigation strategies to move from concept to bankable deals.”
Africa pipeline grows
International arrivals to Africa increased by 12% in early 2025 with Angola, South Africa, Ethiopia, Seychelles and Madagascar among the strongest performers.
Across the continent, 152 hospitality projects have been announced, representing US$8,8 billion in capital investment and an estimated 19 000 new jobs. More than half (53%) are in the accommodation subsector.
Intra-African investment is also increasing with 24 projects valued at US$1 billion signalling growing regional investor confidence.
Despite this momentum, investment flows remain cautious. Sustainable finance, while resilient, has become more restrained with capital increasingly directed towards fewer but higher-quality projects.
Investment activity is also concentrated in specific segments. Approximately 81% of planned projects fall into upscale, upper-upscale and luxury categories while economy and midscale developments continue to attract limited interest from international developers.
Urban destinations dominate the pipeline. Safari lodges account for only 2-3% of planned developments with roughly two thirds of projects located in cities and the remainder mainly in coastal resort areas.
Financing remains one of the sector’s most complex challenges. While Africa is often described as “high risk, high reward”, much of the perceived risk stems from external factors such as political stability and infrastructure gaps. As a result, most hotel developments are financed domestically, often by high-net-worth individuals, with limited participation from institutional investors.
Development finance institutions, such as the International Finance Corporation, Afreximbank and Proparco, play a role but their contributions remain relatively small compared to the continent’s overall investment needs.
“Tourism investment is not just about capital,” Garcia noted. “It’s about alignment between governments, private investors and local communities.”
Industry forecasts also point to continued pipeline growth. Trevor Ward, Managing Director of W Hospitality Group, estimates that up to 550 new international hotels and resorts could open across Africa by 2029 although not all projects are expected to materialise.
“Those that do will raise standards, create jobs and provide career opportunities across the sector,” he said.
“Demographic growth, rapid urbanisation, expanding infrastructure and a transforming tourism market are all contributing to a more attractive investment climate,” Ward noted.
Niche opportunities
The report also identified several emerging niche segments driving future investment. These include gastronomy, wellness, sports, diaspora, heritage, religious and maritime and coastal tourism.
In East Africa, opportunities are especially strong in high-end eco lodges across Rwanda, Uganda and Kenya as well as conservation-based investments linked to carbon markets in areas such as Ngorongoro, Virunga and Kilimanjaro. Adventure tourism also continues to attract interest, particularly around mountain and wildlife destinations.
