Johannesburg - Occupancy rates in South Africa's hotel industry are expected to recover by 2016, thanks to rising tourist numbers and a levelling off in the number of rooms being brought to the market.
Better occupancy rates could give the average room tariff, which fell 9.4% last year, a significant boost, according to PwC's latest report on the country's hospitality sector.
Between 2011 and 2016 only 2 000 new hotel rooms will have been taken into service, a welcome improvement on the 12 000 new rooms between 2007 and last year.
The huge supply of new rooms, many of which were built with a view to the 2010 Soccer World Cup tournament, saw occupancy rates tumble from 71.8% in 2007 to 53% last year, an 18.8 percentage-point decline.
PwC expects that the average occupancy rate will improve by 9.1 percentage points to 62.1% in 2016.
Dr Nikki Forster, who heads PwC's division for the South African hospitality and gaming industry, says precious few new hotels are being built in SA. Most new hotels are going up in other African countries.
Several hotels are however being upgraded, including the Hotel On St Georges and Inn on the Square, both in Cape Town, where the Three Cities group is spending a total R10m on refurbishment.
Protea Hotels is also sprucing up some of its hotels.
Hotels represent 53% of all available rooms in the hospitality sector, but 72% of expenditure. By 2016 the country will have around 62 500 hotel rooms.
The average tariff for a hotel room will increase at a compound annual rate of 4.6% to R1 025 in 2016.
Earnings from hotel rooms are expected to increase to R14.6bn in 2016, from R9.6bn last year.
Three, four and five star hotels combined represented 69% of available hotel rooms last year, and 79% of total hotel room earnings.
The average room tariff at five star hotels last year was R1 750. In 2010 this sector achieved the highest increase in room earnings, 32%, but also the biggest decline, 17%, in the ensuing year.
Forster expects five star hotels to derive more benefit from rising tourist numbers over the next five years than four star hotels.
Consequently, last year's 51.4% five star hotel occupancy rate will go up to 70.5% in 2016. That's higher than the 65.8% occupancy in 2007.
Last year's tourist numbers surpassed market expectations, rising 4.3% to 13.77 million. Of these, 8.34 million came from foreign countries and Forster expects the number to rise to 10.45 million in 2016.
Hotels operate in a volatile market. The economy and political stability both play a role, with infrastructure a lesser factor.
Because of the economic crisis in Europe, the number of tourists from Germany and Britain ñ two countries on which South Africa has always depended ñ has declined.
Those from countries with strong economies, such as China and India, are however on the rise.
Forster says the Chinese regard Cape Town as a tourist destination. In 2010 the number of visitors from China was 62% up, and last year it rose a further
- Sake 24
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