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Johannesburg - Occupancy figures in South Africa's five-star hotels remain under pressure, but observers reckon that the coming World Cup soccer tournament will bring relief.
According to the STR Global Hotel Benchmark, occupancies in South Africa declined 12.8% in the six months to end-December 2009, compared with the corresponding period in 2008.
This creates favourable buying opportunities for property funds wanting to expand their portfolios.
The listed Hospitality Property Fund in the past week announced that it had concluded an agreement to acquire the Protea Hotel Edward in Durban from the Protea Hospitality Group for R110.4m. An independent valuation by JHI Real Estate puts the value of this four-star hotel at R114m. It was therefore bought at a 3% discount.
Gerald Nelson, the chief executive of Hospitality, says that although there is currently an oversupply of rooms in five-star hotels in Cape Town there are early signs of improvement so far in 2010.
Nelson believes the World Cup will benefit the hospitality sector, but the challenge will be what happens after the tournament, when the hotel and hospitality industry will largely depend on economic growth.
He says one of the advantages of the tournament is that it allows little room for corporate and business travel during this period. This has already caused a flurry of activity from these sectors ahead of the tournament, and afterwards increased activity can also be expected.
A large number of new hotel rooms have recently come to the market in Cape Town, increasing competition in the city.
Chaim Cohen, executive chairperson of the listed Quantum Property Group, is positive the tournament weeks will be a period in which South Africa will be discovered.
In December the group opened the doors of its 15 on Orange development in Cape Town. Cohen reports that the hotel is fully booked for the World Cup and there is even a waiting list. The hotel has 129 luxury suites at tariffs of between R3 100 and R8 500 a night.
- Sake24.com
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