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Send  Share  RSS  Twitter  13 Feb 2009

TOURISM: Hotel Operators Target Local Industry


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While the global economic slowdown continues, South Africa's hospitality industry remains upbeat with ongoing positive growth reflected in the hotel market, and with major global operators clamouring to gain a presence, says Joop Demes, CEO of Pam Golding Hospitality.

"At the outset of 2008 we noted the increasingly positive trend in this industry which was evident despite widespread panic regarding the oil price, inflation and electricity shortages and tariff hikes. Now, a year later, we remain extremely optimistic regarding the prospects for the hospitality industry in South Africa and its ongoing resilience," he says.

"To understand why our country is faring so well when compared to the rest of the world we need to bear in mind that in South Africa overall approximately 91 percent of every single bed night that is sold in the hotel industry is sold to someone who lives in Africa.  Over the past five years we have experienced exceptional growth in GDP and while this has slowed considerably, our economy is still growing. In addition, South Africa has two other unique global competitive advantages – strong liquidity, and being host for the prestigious 2010 Soccer World Cup which takes place in less than 500 days," says Demes.

During 2008, and for the third year in succession, the SA hotel market as a whole experienced a double digit increase in Revpar, ie revenue per available room, with 2008 up by an impressive 10 percent compared to 2007. There are some highly attractive areas to consider in terms of investment, generally referred to as 'honey spots'. Topping the priority list is Gauteng's 3, 4 and 5 Star market, which recorded an overall 22.8 percent increase for 2008 with the six-month period ended 31 December 2008 up by a notable 18.8 percent compared to the same period the previous year – as quoted in a recent Smith Travel Research Global Survey.

"The constant growth of South Africa's hospitality industry and significant potential in a number of areas within the country is not unnoticed and has manifested itself with unprecedented interest from developers, listed property companies and institutions.  During the past 11 months Pam Golding Hospitality and Tourism Consultants was engaged for 17 hotel development feasibility studies and we estimate that these alone will convert to R4.3 billion in investment which in turn will create 2 060 permanent jobs," adds Demes.

"In addition, Pam Golding Hotels is currently engaged in the facilitation of no less than nine new hotel developments in Cape Town. Combined with a number of other hotels that are currently being completed, we anticipate that over the next two years alone this will result in an estimated investment of approximately R4 billion, with the creation of some 2 500 permanent jobs. Nearly every major branded hotel operator in the world has registered their requirements and credentials with us in search of an opportunity to be present or to expand in Southern Africa.  Further to this, Pam Golding Lodges and Guest Houses is receiving an increasing number of enquiries for quality guest houses, boutique hotels and restaurants. Right now the time and place for investment in the hospitality industry seems to really favour South Africa.

"At present leases are favoured by a number of hotel operators, however, in our opinion this will change as and when South Africa experiences further much-anticipated reductions in interest rates.  With a meaningful reduction in cost of capital, the appetite for private residence clubs and condominiums will also re-emerge and will feature strongly in the years ahead," adds Demes.

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