Hotels face a myriad of challenges in their quest to balance profitability whilst accommodating and retaining a surge of international tourists. Among these challenges are the increased costs associated with factors such as load shedding, crime and poor infrastructure.
The latest full-year international tourist arrivals to South Africa reveal an impressive 8.5 million visitors from January to December 2023 – a 48.9% increase compared with 2022. In February 2024 arrivals saw an additional 8% increase. Although the industry is thrilled with the surge in demand, consistently meeting and exceeding expectations while managing expanding charges and costs remains a challenge.
Navigating this challenge is complex. Often overlooked, the difficulty lies in finalising and establishing costs for international visitors two years in advance using (by then) outdated figures.
The cost-of-living crisis has led to a significant increase in expenses, particularly in fuel and electricity, thus disproportionately straining those rates established two years ago. Balancing the need to remain competitive without risking the loss of valued customers adds another layer of difficulty when renegotiating costs.
Consider a game drive as an example. Looking at the past two years, we have observed a massive increase in fuel prices. Due to deteriorating infrastructure, maintenance costs for safari vehicles have also risen steeply.
Furthermore, gate fees and the expense of refreshments will continue to rise. In the fiercely competitive international marketplace, one can only reasonably escalate pricing by 8% annually to stay competitive. Consequently, this often translates to diminishing returns per guest annually.
Disrupted operations
And, whilst loadshedding looms over our heads, operations can be disrupted again and hotels would continue to be forced to invest in alternative energy sources to maintain continuity of service, escalating costs.
Meanwhile crime casts a shadow over the industry, necessitating heightened security measures that come with a hefty price tag. Add to this the burden of poor infrastructure, which not only hinders the smooth functioning of hotels but also detracts from the overall guest experience. Thus, the question arises: Can hotels feasibly cover these increased costs while safeguarding their bottom line?
One potential avenue for hotels to address escalating costs is through operational efficiencies. Embracing energy-saving technologies and sustainable practices not only reduces the impact of load shedding but also appeals to eco-conscious travellers, thereby enhancing the hotel's marketability. Innovative revenue management strategies, driven by data analytics and technology, enable hotels to optimise pricing structures and capitalise on peak demand periods, maximising revenue streams.
However, it is essential to recognise that hotels cannot tackle these challenges alone. Collaboration with the government, local authorities, and the private sector is vital. By forging strategic partnerships, hotel groups can advocate for infrastructure improvements, enhance safety and security measures, and collectively promote the destination's appeal to international tourists.
The ability of hotels to weather these challenges and thrive in the face of adversity hinges on their willingness to embrace change and innovation. Let us not lose sight of the opportunities that lie ahead and the potential for growth and prosperity despite adversity.
