The economic roller coaster that the south African economy is facing could easily fool anyone that business would not do well but a report by Price Water house Coopers says that despite all this the country’s hospitality sector is poised for further growth in the next five years in the wake of a number of inbound travellers into the African continent.
PwC’s 4th edition of the ‘Hospitality Outlook: 2014-2018′ projects that by the year 2018 the overall occupancy rate across all sectors in South Africa will increase, rising to an estimated 58.4 percent. Total room revenue is expected to reach R28.7 billion in 2018, a 10.7 percent compound annual increase from 2013.
“Occupancy rates are expected to increase for hotels over the next five years, overtaking guest houses, bush lodges and guest farms to again become the leading category,” said Nikki Forster, PwC Leader of Hospitality and Gaming. Occupancy rates for hotels are projected to increase from 58.9 percent in 2013 to 71.1 percent in 2018.
The report features information about hotel accommodation in Nigeria, Mauritius and Kenya. Accommodation sectors in South Africa consist of hotels, guest houses and guest farms, game lodges, caravan sites, camping sites and other overnight accommodation. For the first time the report includes a detailed analysis of the cruise industry in South Africa.
“One of the most significant developments in 2013 in the South African hospitality industry was the rise in average room rates, which increased 8.4 percent, well above the 5.9 percent rate of inflation,” says Forster.
Despite the recent economic uncertainty, the total number of foreign overnight visitors to South Africa rose 3.9 percentin 2013, down from the 10.2 percent increase in 2012, but still reflecting continued growth in foreign travel to South Africa. Foreign travel to South Africa was boosted in early 2013 by the African Cup of Nations football tournament and in December following the death of the late President Nelson Mandela, which led to an increase in the number of visitors to Robben Island where he spent many years in jail.
South Africans are also tightening their belts when it comes to luxury holidays abroad and turning to local travel as an alternative. The total number of travellers in South Africa is projected to reach 17.6 million.
In 2013 overall spending on rooms in South Africa in all categories rose 14 percent to R17.3 billion, reflecting an increase in stay unit nights and an 8.4 percent rise in the average room rate. The report estimates that by 2018 there will be about 63 600 hotel rooms available up from 60 900 in 2013.
Elsewhere, Nigeria’s economy is booming, buoyed in part by regional and international investment. Hotel room revenue rose 59 percent between 2009 and 2013. Conversely hotel room revenue in Mauritius decreased by 8.7 percent in 2013 but is projected to grow at 4.6 percent compounded annually to 2018. Kenya’s hotel market declined during the past two years, largely due to terrorist concerns.