South Africa’s hotel industry is set for steady growth over the next five years, driven by an increase in the number of foreign visitors travelling to the African continent, according to PwC.
“Although the South African economy has weakened considerably, the overall outlook for hotels in South Africa is expected to remain positive,” explains Pietro Calicchio, Industry leader of Hospitality & Gambling, PwC Southern Africa.
“The devaluation of the rand and the relaxation of certain visa regulations has 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.”
According to PwC’s 6th edition Hotels Outlook 2016-2020, revenue from hotel accommodation in South Africa rose 8.1% in 2015 to R14.2 billion, reflecting an increase in stay unit nights and a 6.5% rise in the average room rate.
Overall, hotel room revenue is projected to expand at a 7.8% compound annual rate to R20.6 billion in 2020. PwC’s report features information about hotel accommodation in South Africa, Nigeria, Mauritius, Kenya, and Tanzania.
“The tourism industry continues to be one of the fastest growing sectors of Africa’s economy. In spite of recent challenges, including the change in visa regulations in South Africa and the contraction of the global economy, the sector has significant potential to create jobs and uplift inclusive economic growth across the continent”
New visa regulations had a sharp impact on the South African tourism industry. After growing at an 8% compound annual rate between 2009 – 2013, the number of foreign overnight visitors rose only 0.2% in 2014, before falling 6.8% in 2015.
A key factor cited as contributing to the decline was the requirement that foreign travellers appear in person at South African embassies to have their biometric information taken.
In October 2015, some of these regulations were eased and the Department of Home Affairs is considering introducing further amendments.
Overall, in 2015 there was a decline in the number of foreign travellers to South Africa from every region except the Middle East and North Africa. Of non-African countries, the UK is still the largest source of visitors to South Africa at 407 486 in 2015, an increase of 1.4%. It was one of the few countries from where visitors increased in 2015, but that gain did not offset the overall 6.8% decline from 2014.
Visits from the US dipped below 300 000 in 2015, down 3.9% from 2014. Germany was down 6.5% in 2015, while Australia fell 10.8%.
Of African countries, the largest numbers of foreign visitors to South Africa in 2015 came from Zimbabwe (2.1 million), followed by Lesotho (1.5 million) and Mozambique (1.3 million) but all were lower than in 2014.
On a more positive note, the number of monthly overnight tourist visitors to South Africa started picking up towards the end of 2015 and rose above the one million mark for the first time in January 2016, with international visitor numbers up by 16.8% for the months of January to April 2016 when compared to the same period in 2015.
Visitor numbers from Europe have increased by 13.6%, China 38.0% and North America 16.4% through to April 2016 when compared to the first four months of 2015. For 2016 as a whole, a 12.4% increase in foreign visitors is anticipated.
The number of hotel rooms planned in Africa has increased from prior years in the wake of a number of developments across the continent.
Overall, room revenue in South Africa, Mauritius, Nigeria, Kenya and Tanzania rose 6.7% in 2015 – the largest gain since 2011. Tanzania had the largest increase with a 14.4% gain, the result of a large increase in the average room rate that offset a drop in stay unit nights.
Five-star hotels had the highest occupancy rates in the market at 79.5% in 2015, up from 70.7% in 2014 as stay unit nights increased by 12.5%.
“It is promising to see a growing number of new hotels that are planned for the South African market over the next five years,” adds Calicchio. “We are forecasting an additional 2600 hotel rooms to be added over the next five years. We forecast that hotel room revenue will grow by 11.9% in 2016 to R15.8 billion.
“The tourism industry continues to be one of the fastest growing sectors of Africa’s economy. In spite of recent challenges, including the change in visa regulations in South Africa and the contraction of the global economy, the sector has significant potential to create jobs and uplift inclusive economic growth across the continent.”