Dubai Royal’s $50,000-a-Night Resort Flaunts Africa’s Future in Luxury Travel

A private island off the coast of Tanzania, where guests pay around $50,000 a night for an exclusive-use villa, catamaran and helicopter transfers within a protected marine reserve, is the latest frontier in Africa’s booming luxury hospitality market.

Operated by Jumeirah Group LLC, part of the Dubai ruler’s business empire, the island resort reflects a broader surge of global investor interest in African hospitality. From vineyard stays to luxury safaris and gorilla trekking, billionaires, tech moguls and Middle Eastern investors are pouring capital into the continent, seen as one of the last underpenetrated markets for luxury travel.

They are stepping in to fill a funding gap left by banks, which are cautious due to political risk, limited performance data and high upfront costs of building in remote areas. In Africa, major lenders typically finance only about half the value of a hotel project, as bookings and revenue are hard to forecast.

While some investors are focused on long-term returns or legacy assets for future generations, others are chasing what Trevor Ward, managing director of W Hospitality Group, calls “return on ego.”

Virgin Limited Edition, the ultra-luxury hotel brand founded by billionaire Richard Branson, has made Africa central to its portfolio. More than half its retreats are on the continent, and the company is exploring additional investments. Guests are drawn to what Chief Executive Officer James Bermingham

Others are following suit. Koos Bekker, the billionaire behind Naspers Ltd., recently opened his second ultra-luxury retreat in South Africa, while entrepreneur Haddis Tilahun’s United Africa Group is in talks to buy five properties in the country. Club Med SAS, backed by Chinese tycoon Guo Guangchang’s Fosun International Ltd., is also set to open a bush-and-beach resort in South Africa next July.

Middle Eastern capital is playing an increasingly prominent role. Jumeirah has partnered with Thanda Group’s Swedish founders to offer both the private island off Tanzania and a Big Five safari experience in South Africa. Kasada Capital Management, backed by Qatar’s sovereign wealth fund, is scouting deals in Morocco, building on its portfolio of 19 hotels across seven African countries. Albwardy Investment, the firm behind Dubai’s Desert Palm Polo Estate, is developing projects in Zanzibar and Seychelles.

The shift marks a deeper transformation: Where African hospitality was once shaped by government-led development, it’s now increasingly driven by private capital seeking to capitalize on rising demand.

At an industry summit in Cape Town last month, at least 240 new hotel developments were announced. That adds to the 577 hotels with over 100,000 rooms under construction, according to a 54-country report by W Hospitality Group. Global chains like Marriott International Inc., Hilton Worldwide Holdings Inc. and TUI AG are increasing their footprint, but it’s often deep-pocketed individuals driving ultra-luxury developments.

Building in many emerging African markets often means starting from scratch. In some locations, basic back-of-house facilities — including laundries, bakeries, water treatment plants and back-up power — need to be built by the developer, making projects complex and costly. As a result, many investors find upscale projects more financially viable than budget or mid-range hotels, said Andrew McLachlan, founder of Develop Hotels Inc., who’s worked on more than 150 hotel deals worth $5 billion across 35 African countries.

Despite this, the real opportunity may lie further down the market. As several of the world’s fastest-growing economies are in Africa, a rising middle class is creating new demand. More Africans are traveling, both for leisure and business, and seeking well-run, affordable hotels.

Tourism numbers are already surging as a global craving for White Lotus-style escapes fuels demand for high-end travel, while business and intra-African trips continue to support growth in city hotels.

In 2024, Africa surpassed pre-pandemic levels of international tourist arrivals, welcoming 74 million visitors, according to UN Tourism. That’s still only a fraction of the roughly 750 million tourists hosted by European countries last year, where over-tourism has triggered protests, housing shortages and backlash from locals fed up with congestion and disruption.

For many investors, the cost of entry is lower than in more mature markets, from land acquisition to development, according to Michael Pownall, managing partner of Valor Hospitality Partners. “You could become a bigger player quicker because perhaps there’s less competition than there would be in a more mature market.” But those lower prices often reflect significant risks, including political instability, conflict, inexperienced developers and high financing costs, he said.

Still, some in the industry caution the rush to develop must be carefully managed. Markus Lehnert, Marriott’s senior vice president for international hotel development, said governments should avoid the missteps of Mediterranean destinations that overbuilt their coastlines during boom periods and lost parts of their charm. “Right now, Africa is not at risk of over-development, but when this happens, it can happen very quickly and governments should be mindful of this.”

A 2024 Deloitte report on NextGen travelers and destinations shows the Middle East and Africa have the highest expected annual growth rate of inbound arrivals through 2040. Africa alone is projected to grow at a compound annual rate of 3.5% from 2019 to 2040, reinforcing the region’s long-term potential.

Regional players like CityBlue are expanding to meet this demand. With roots in East Africa, the firm is planning expansion into Ghana and Nigeria, founder Jameel Verjee said.

Asian brands, too, are entering the market, hoping to replicate their domestic success on African soil. Nepal’s CG Hospitality, a unit of the country’s only billion-dollar conglomerate, is in talks to buy a management company with 30 hotels as part of its push into Africa. CEO Rahul Chaudhary said the company aims to scale to over 600 hotels globally by 2030 and sees the continent as key to that ambition. “We love investing in management companies because it gives us access and a footprint in regions right away,” he said.

Urban hospitality is also attracting investor interest. In markets with limited good quality rooms, city hotels often achieve higher revenues than their counterparts in saturated global destinations, according to Valor’s Pownall. “Guests tend to eat in more,” he said, noting that premium restaurants and bars within hotels attract wealthy locals as well.

For Hamza Farooqui, whose Millat Group just opened its fourth Hyatt-branded property in South Africa, hotels are the “perfect” asset class, allowing operators to adjust room rates to hedge against inflation and currency volatility.

Still, traditional financing remains scarce, in part due to difficulties in forecasting cash flows. For hotels, banks typically issue senior debt at a loan-to-value ratio of 55%, said Catherine Hendry, a property finance executive at Nedbank Group Ltd.’s corporate and investment banking unit.

Limited performance benchmarking data makes financing even harder. In many African markets, too few hotels report occupancy and rate data, making it difficult for lenders to assess risk with confidence.

Yet for seasoned operators, the continent remains full of opportunity.

andBeyond, co-owned by the Getty Family Trusts and the South African clan behind the Nando’s restaurant chain, sees demand rising for immersive, conservation-led travel. Guests expect “exceptional comfort” and opportunities to see rare wildlife, and make meaningful connections with local cultures and nature, said Chief Operating Officer Ryan Powell.

Family-run luxury groups are also thriving. Liz Biden, a former fashion entrepreneur, and her husband, a former banker, founded The Royal Portfolio by converting their holiday home in South Africa’s Greater Kruger National Park into the ultra-luxury Royal Malewane, where premium accommodation can go for more than $30,000 a night. Absolute discretion, “personal touches and small details” set them apart from global chains, Biden said. Musician Elton John is among the group’s celebrity guests.

Sarova Hotels, one of East Africa’s oldest chains, also banks on bespoke touches such as custom menus for guests, many of whom visit from the US, UK and India, Director Mita Vohra said.

Already, Africa has a reputation for producing some of the world’s leading luxury brands. Late South African hotelier Sol Kerzner was behind both One&Only and Atlantis Resorts, while conservationist Adrian Gardiner built Mantis Collection into a top eco-focused hospitality group.

For many investors, the allure is as much emotional as financial.

“From my very first visit, I was captivated by the continent’s beauty and the extraordinary spirit of its people,” said Branson, founder of Virgin Group. “It’s impossible not to fall in love with Africa.”

By Prinesha Naidoo