Demand for more holiday accommodation in SA

August 1, 2016

Al least six new hotels with more than 200 rooms or more are expected to be built in South Africa within the next five years, according to PwC.

The professional services firm expects 2 600 new hotel rooms to be added to the market in this period and the overall number of available rooms in the country to increase at a 0.7 percent compound annual rate to 67 000 in 2020 from 61 100 last year.

Pietro Calicchio, an industry leader of hospitality and gambling at PwC Southern Africa, said yesterday that 54 percent of the additional hotel room capacity would be in Cape Town.

"We forecast that hotel room revenue will grow by 11.9 percent in 2016 to R15.8 billion. The interest in new hotel developments in Cape Town reflects its strong growth rates and its appeal as a tourist attraction," he said.

Total room revenue is forecast to grow at a 7.8 percent compound annual rate to R20.6bn in 2020 from R124.2bn last year.

PwC's sixth edition of its hotels Ooutlook report said major openings of hotels in South Africa with 200 rooms or more included the Radisson Blu Hotel & Residences in Cape Town in 2017; Sun International Menlyn as part of a R3bn urban casino and entertainment complex in 2017; the R1bn Marriott Executive Apartments in Johannesburg in 2019; Stayeasy and Sunsquare, Tsogo Sun's two hotel complex in Cape Town with a combined cost of R680 million in 2017; the R380m Radisson Red V&A Waterfront in Cape Town in 2017; and Ibis Communicare in Cape Town in 2019.

Calicchio said the overall outlook for hotels in South Africa was expected to remain positive despite the considerable weakening of the South African economy.

"It is promising to see a growing number of new hotels that are planned for the South African market over the next five years," he said.

Calicchio said the star performers in the market last year were five-star hotels, which increased revenue by 21 percent to R2.1bn and achieved record occupancies of 79.5 percent.

But Calicchio said it was unlikely that more five-star hotels would be built in South Africa in the forecast period, because it was a niche market and a lot of investment went into a fivestar hotel.

However, if occupancies kept on growing, additional five-star hotels might come on stream, he said.

Calicchio said the devaluation of the rand and the relaxation of certain visa regulations had both had a positive impact on the tourism industry in South Africa, making the country a more attractive tourism destination.

"This has also had a positive impact on the number of foreign visitors to South Africa over the past six months," Calicchio said.

There was a 6.8 percent decrease in visitors to South Africa to 8.9 million last year from 9.5 million in 2014.

He attributed this largely to the new visa regulations and the state of the global economy.

Calicchio said the visa regulations were relaxed in October and there was a 16.8 percent increase in monthly overnight visitor numbers in the first four months of this year compared with last year, with monthly visitor numbers exceeding 1 million for the first time in January.

Veneta Eftychis, an associate director at PwC, said that the number of arrivals in Mauritius had increased by 11 percent last year, the largest increase experienced in the past five years.

Eftychis believed this could have been caused by tourists diverting their destination from South Africa to Mauritius because of the island's more lenient visa requirements.

PwC's hotel outlook report focuses on South Africa, Nigeria, Mauritius, Kenya and Tanzania.


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