A RECOVERY of the
hospitality sector since
2012 and increasing
demand could see new
inventory entering the market
within the next three years.
This is according to a
report by Pam Golding
Properties. Kamil AbdulKarrim,
md of Pam Golding
Tourism & Hospitality,
says the hospitality sector
is currently trading at
occupancy levels above 60%
compared with around 50%
in 2011. “Currently July
2014 year-to-date average
occupancies in Cape Town
are running at 66,6%, well
ahead of any other city in
South Africa. Positively, the
South African market as a
whole is far more exposed to
the corporate traveller than
the leisure tourist – both
international and local – and
for this reason the recovery
has been more pronounced
in major metropolitan areas,”
he adds.
Clifford Ross, ce of the
City Lodge Hotel Group,
says occupancy for the
group to June 30 was 63%
countrywide, with Cape Town
performing better during
this period but likely to be
affected by seasonality.
He adds that it is difficult
to predict whether or not
this trend will continue in
Cape Town in the current
economic climate and with
pending visa changes to
be implemented by the
Department of Home Affairs.
According to Joop Demes,
ceo of Pam Golding
Hospitality, hotel property
values in Cape Town and
the surrounding Winelands
have seen a sharp
increase but he believes
there are underperforming
hotels that offer sound
investment opportunities.
“Underperforming hotels
typically offer the investor
the opportunity to refurbish
and rebrand and to enter a
booming Western Cape hotel
market literally within three
to four months, as opposed
to a greenfield project that
will typically take three years
plus.”
Joop says hotel groups
such as Accor, Hyatt and
Fairmont that already
have a presence in South
Africa, should consider this
approach as they “without
doubt, need presence in
Cape Town”.
He says he is very positive
about the hotel industry and
its prospects. He forecasts
the average occupancy in
2014 for Cape Town to
exceed 70%. “The increasing
demand for hotel rooms
is spilling over into the
Winelands and the rest
of the Western Cape, and
the average occupancy will
grow further as demand is
increasing and will continue
to do so for at least three
years until new room
inventory enters the market.”
According to Joop, the
increasing demand for
rooms, with insufficient
inventory in Cape Town, will
see hoteliers’ yield improve,
resulting in higher average
daily rates. “What we are
already experiencing is an
overflow into the Winelands,
the Garden Route and
Route 62, where prices are
generally more negotiable,”
he adds.
Clifford says if occupancies
continue to rise slowly,
operators will begin to
look to increase rates as
demand increases. “There
has been a very long period
where hotels were pricing
below sustainable levels
and will now try to use
renewed patterns to
get these rates to more
sustainable levels.
