JOHANNESBURG—South Africa’s hospitality sector is poised for further growth in the next five years bolstered by inbound travelers, despite a difficult and volatile economic climate, according to PwC.
In its most recent edition of Hotels Outlook: 2017-2021, the report projects South African hotel room revenue will grow by 10.1% in 2017 and is expected to expand at a 9.3% compound annual rate out to 2021.
Pietro Calicchio, hospitality and gaming industry leader for PwC Southern Africa, noted, “Africa’s hotel sector has remained resilient in the face of strong economic headwinds.”
The outlook for 2017 is positive with an increase in the number of international visitors to South Africa expected. Domestic tourism also is anticipated to increase by 2.2% in 2017, according to the report.
“One of the positive outcomes for the hotel market in South Africa was the amendment of visa requirements that required foreign visitors from certain countries to provide biometric data in person. International visitor numbers to South Africa rebounded significantly in 2016 with a 12.8% increase as compared to the 6.8% decrease in 2015,” Calicchio commented.
Visits from China and India increased in 2016 as a result of the relaxation in the visa requirements; travelers from China to South Africa increased by 38% and India recorded a 21.7% increase, according to the report. Of non-African countries, the UK is still the largest source of visitors to South Africa at 447,840 in 2016.
Of the African countries, the largest number of foreign visitors to South Africa in 2016 came from Zimbabwe at two million, followed by Lesotho at 1.8 million and Mozambique at 1.3 million. In addition, visits from East and Central Africa also rose by 11.2% in 2016.
The report noted a growing number of new hotels planned for the South African market over the next five years. The overall number of available rooms is expected to increase at a 0.9% compound annual rate, adding 2,700 rooms over this period.
Nigeria is expected to be the fastest-growing market from a revenue perspective over the next five years with a projected 14.7% compound annual increase in revenue, benefitting from an improving economy, continued growth in domestic tourism, and expansion in the number of available rooms, according to PwC. South Africa is projected to be the next-fastest growing market with a 9.3% compound annual increase in room revenue, most of which will be generated by rising average room rates and continued but moderating growth in tourism.
The report added the emergence of inventory from entities such as Airbnb has bolstered growth in non-hotel accommodations. Ongoing growth in the sector over the next few years will make the market more competitive, which may limit room-rate growth for hotels, noted PwC.