Western Cape Business News

Send  Share  RSS  Twitter  26 Nov 2008

HOSPITALITY: Luxury Tourism Feeling the Crunch


Recent Western Cape Business News

The impact of the global economic crisis is affecting the luxury tourism industry in South Africa, with a number of hotels and other operators having to discount their prices over the peak holiday season for the first time in many years. And, as a consequence, those international visitors still willing to travel to South Africa will benefit from the improved value-for-money offering, as well as the weaker local currency.

Ursula Gray, Chief Executive of the 5 star Cape Royale Luxury Hotel and Residence in Cape Town’s Green Point, says that most of the luxury hotels in South Africa are struggling to raise their occupancy levels over the holiday season and many are offering previously unheard-of special offers as a means of enticing additional guests. She notes that hotels that are perceived to offer better value for money are likely to fare better over the period.

“As an all-suite offering, the Cape Royale, for example, is able to offer the advantages of lower unit prices for families or groups staying in the same suite, as well as the option of self-catering and entertainment within the comfort of one’s own luxury apartment.   

Referring to figures recently released by the South African Tourism office, Gray notes that during August – traditionally a month which sees an improvement in the number of international travelers to South Africa following the low season – actual numbers declined, with the Far East market recording the most significant decrease.

“In times of economic crisis, the Asians are often the first to stop traveling, while lead times for visitors from Europe or the USA are generally a little longer.   With a further slump in the global economy during October and November, the outlook for the luxury tourism industry is increasingly negative. These figures are borne out by IATA statistics relating to the sharp plunge in international air passenger traffic, with carriers to Africa being the hardest hit,” she says.  

Gray says that the local luxury tourism industry will face severe challenges as a result of the downturn in the global economy, and that many luxury hotels may have to review their rates. Independent research conducted amongst tour operators suggests that some luxury hotels in Cape Town have hiked their rates for several years in a row, and that non-competitive prices are a factor contributing to the lower occupancies this season.

“For South Africa to compete effectively with other long-haul destinations for a share of the increasingly restricted international traveler market, it’s important that hotels price themselves at the correct levels.

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