Despite South Africa’s economy facing headwinds, the 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, according to a report issued by PwC.
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%. Total room revenue is expected to reach R28.7 billion in 2018, a 10.7% 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,” says Nikki Forster, PwC Leader of Hospitality and Gaming. Occupancy rates for hotels are projected to increase from 58.9% in 2013 to 71.1% 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.
The hotel market in Nigeria grew 9% in 2013, which was the smallest gain since 2010.Stay unit nights increased 6.3% in 2013 and have grown faster than room availability over the past three years. Average room rates have grown slowly in the last two years, rising by only 2.5% in 2013. The number of hotel rooms is expected to triple during the next five years, rising from 8 400 in 2013 to 24 000 in 2018. Overall hotel room revenue is also anticipated to expand at a 22.6% compound annual rate to $1.1 billion (R12.1 billion) in 2018 from $413 million (R4.4 billion) in 2013.
Mauritius competes with the Maldives, Sri Lanka and the Seychelles for the tropical tourist market. The average hotel room in Mauritius costs €170 (R2 492); 2.7 times higher than average rates in South Africa and 28% higher than South Africa’s average five-star room rate. Due to the number of renovations and projects taking place in the industry, the number of available hotel rooms is expected to increase at a 2.9% compound annual rate to 14 250 in 2018. The average occupancy rate will edge down from 63.3% in 2013 to 61.5% in 2018.
Kenya’s hotel market declined during the past two years, falling 6.6% in 2012 and an additional 2.6% in 2013. Concerns about terrorism led several countries including the US and the UK, to issue travel alerts that discouraged people from visiting Kenya. The number of available rooms in Kenya is however projected to increase from 17 500 in 2013 to 19 400 in 2018 with an increase in the average room rate from $155 (R1 641) in 2013 to $163 (R1 726) in 2018. Total room revenue is expected to expand by 2.5% compounded annually, rising to $668 million (R7.1 billion) in 2018 from $589 million (R6.2 billion) in 2013.
