South Africa’s hospitality sector is poised for further growth in the next five years bolstered by inbound travellers, despite a difficult and volatile economic backdrop.
Pietro Calicchio, hospitality and gaming industry leader for PwC Southern Africa says: “Africa’s hotel sector has remained resilient in the face of strong economic headwinds.”
PwC’s 7th edition of the ‘Hotels Outlook: 2017-2021’ projects that South African hotel room revenue will grow by 10.1% in 2017 to R17.5bn (US$1.35bn), with a further 9.3% compound annual rate increase to R24.8bn by 2021.
PwC’s report features fresh information about hotel accommodation in South Africa, Nigeria, Mauritius, Kenya and Tanzania, while also adding Ghana and Ethiopia as emerging hotel markets this year.
The Outlook predicts an increase in the number of international visitors to South Africa for 2017.
“One of the positive outcomes for the hotel market in South Africa was the amendment of visa requirements that required foreign visitors from certain countries to provide biometric data in person. International visitor numbers to South Africa rebounded significantly in 2016 with a 12.8% increase as compared to the 6.8% decrease in 2015,” Calicchio notes.
Visits from China and India increased in 2016 as a result of the relaxation in the visa requirements; travellers from China to South Africa increased by 38% and India recorded a 21.7% increase. Of non-African countries, the UK is still the largest source of visitors to South Africa at 447,840 in 2016. Overall, room revenue in South Africa rose 12.2% to R15.8bn in 2016, the biggest increase since 2013. Over the past five years, the occupancy rate has risen, surpassing the 60% level and reaching 61.2% in 2016. This gain has stimulated interest and a number of new hotels are expected to open in the next five years.
Over the next five years, 55% of all the rooms expected to be added in South Africa will be in Cape Town. Durban’s hotel market attracts more tourists than Johannesburg, but fewer than Cape Town. Although Durban benefitted from the pick-up in tourism in 2016 a weak business market held back overall growth.
Nigeria is expected to be the fastest-growing market from a revenue perspective over the next five years with a projected 14.7% compound annual increase in revenue, benefitting from an improving economy and expansion in the number of available rooms.
South Africa is projected to be the next-fastest growing market with a 9.3% compound annual increase in room revenue, most of which will be generated by rising room rates and a continued moderate growth in tourism.
The emergence of peer-to-peer inventory from entities such as Airbnb, has bolstered growth in non-hotel accommodation.
Calicchio adds: “The hotel market in each country is affected by both the local and global economy, with some countries being more dependent on foreign visitors than others.”
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