Johannesburg - Hotels are cutting back rates by up to 50% in a bid to boost flagging occupancies following the sharp downturn in South Africa's tourism trade.
The biggest discounts appear to be in Cape Town's luxury four and five star market which has been hard hit by the drop in corporate travel and conference markets.
Local and international leisure travellers have also become more cost conscious and are trading down to cheaper hotels.
An internet shows that a number of four star Protea hotels including the Victoria Junction at the V&A Waterfront and the President on the Atlantic Seaboard now offer rooms for less than R700/night.
At the four star Best Western in Cape Town's inner city, rooms are priced as low as R550/night while starting rates at the five star Ambassador Hotel in Bantry Bay are down to R800/night. A year ago, one could not get a room at the Ambassador for less than R1 400/night.
Meanwhile, Sol Kerzner's new five star One & Only Cape Town hotel at the V&A Waterfront has been forced to lay off 50 staff less than four months after the luxury hotel's much-trumpeted opening.
JSE-listed hotel fund Hospitality Property Fund recently warned that its earnings will be down 20% to 30% for the six months to June 2009 on the back of an "unprecedented downturn" in the travel trading climate in recent months.
Hospitality's portfolio includes a number of Protea and Holiday Inn hotels as well as the Radisson at the V&A Waterfront, Mount Grace in the Magaliesberg and Champagne Sports Resort in the Drakensberg.
Latest available data from Smith Travel Research's (STR) global hotel benchmark survey confirms that South African occupancies and revenues are under pressure.
According to STR figures, hotel occupancies across South Africa dropped by 15.1% in the first four months of 2009 year-on-year while revenue per available room (Revpar) was down 11.3% over the same time.
Although industry players say that recent sporting events such as the Indian Premier League (IPL), the Confederations Cup and Lion's rugby tour lifted May and June occupancies, hotel trading figures dipped again in July.
Debt counselling organisation Consumer Assist warned that more job losses are expected in Cape Town and Durban's hospitality industry over the coming months as the recession continues to bite into corporate and leisure travel budgets.
Job losses mount
Consumer Assist CEO André Snyman said its Cape Town office was dealing with a growing number of debt counselling applications from people who have lost jobs in the hotel, guest house and conference industries.
"The sudden spikes from the tourism industry is worrying because it has become a bedrock of the Western Cape and KwaZulu-Natal job creation sector and a major income earner for South Africa".
Snyman said it appeared that prices at many South African hotels and restaurants remained artificially high, in the hope of a 2010 Soccer World Cup bonanza.
Some establishments have out-priced themselves for the domestic tourism market and forgotten that foreign visitors are also cutting back on travelling budgets due to the global recession, he said.
Latest Statistics SA figures show that the number of foreign visitors (excluding Africa) to South Africa dropped 12.5% in March 2009 year-on-year, with 27% fewer tourist arrivals from German and 18% fewer from the UK.
Alan Vels, former MD of Three Cities and CEO of newly formed hotel management group Signature Life Hospitality, said the sudden and sharp turnaround in hotel trading conditions since end-2008 will force the South African hospitality industry to find clever ways to cut costs.
"For instance, why keep a hotel's kitchen open on Sunday evenings when occupancies are typically at their lowest, especially if you are located within a busy tourist hub with easy access to other restaurants"," said Vels.
South African hotel developers and operators need to adapt to travellers' changing needs.
"There is a new kind of traveller who has become accustomed to good service and stylish lodging but doesn't necessarily need marble fountains to make their stay memorable."
The hospitality industry also needs to rethink the way they advertise and sell their products.
"Discerning travellers today use the internet to book hotel accommodation so it is unnecessary to spend millions on traditional sales and marketing channels like call centres."
Vels said bigger is no longer better. Large hotels with a substantial cost base are the ones struggling most in the current downturn. Smaller hotels that offer an intimate experience and an authentic personality are the way to go, he said.
Signature Life Hospitality operates three hotel brands including Signature Hotels, Quarters and Life Hotels with some 25 hotels (recently opened or under construction) in its stable across South Africa, Mozambique and Madagascar.
- Fin24.com