SA hotels hope for the best with tourist boom

The report warns, however, that a recovery will only be seen when demand catches up with present supply. 

Nikki Forster, PriceWaterhouseCoopers leader of hospitality and gaming cautions against new developments and suggests that the sector concentrate more on making the most of its range of offerings and on ensuring they provide excellent value. 

The PwC report, the South African hospitality outlook: 2013-2017, which includes hotels, guest houses and guest farms, game lodges, caravan sites, camping sites and other overnight accommodation, foresees South Africa benefiting from the increase in travellers to the African continent. 

It said the average hotel occupancy rate is projected to increase from 56.5% in 2012 to  to 68.7% in 2017.

Despite recent economic uncertainty, there was a 9.7% increase in visitors to South Africa from Europe in 2012, while the number of North American visitors rose 13.9%. Most foreign visitors to South Africa (72.4% in 2012) came from other countries in Africa and those visits rose 8.5%. Domestic travel, however, fell 8.5%. More than 200 000 visitors came from China (132 327) and India (106 774), respectively.

Forster said: "Hotels are expected to be the fastest-growing category over the next five years. As in 2012, we expect the demand for rooms to again grow faster than supply and for the overall occupancy rate to increase."

Growth in the hotel sector will be gradual over the next five years as demand rises to fill supply, with five star hotels seeing the immediate benefits. 

The report said with just a few new hotels now opening and others being upgraded, the number of rooms is expected to remain relatively constant, increasing by 1.2% in 2013 and then growing at rates averaging just below 1% annually through to 2017. 

By 2017 there are projected to be 63 000 hotel rooms available. Hotel room revenue is expected to expand to R16.8-billion in 2017, up 9.5% compounded annually from R10.7-billion in 2012. The increase in foreign overnight visitors benefitted five-star hotels more than any other sector with room revenue increasing by 18.7% to R1.2-billion. 

"We expect five-star hotels to continue to benefit more than three- and four-star hotels from the increase in foreign tourism during the next five years, the result of continued growth in business travel and an increase in tourism from other Bric countries," says Forster.

Overall spending on rooms in all categories rose 13.4% in 2012 to R15.2 billion, reflecting an increase in stay unit nights and a 5.3% rise in the average room rate. Stay unit nights were up 7.7% in 2012, the largest gain during the past five years. With room availability up only 1.5%, the average occupancy rate increased to 50.2%, the highest average since 2008. Spending is projected to rise to an additional 11% in 2013, boosted by a 5.7% increase in stay unit nights and a 5.2% escalation in the average room rate.

The average room will cost R936 in 2017, up 5.4% on a compound annual basis from R718 in 2012, states the report.


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