South Africa's peak December tourism season for the hospitality sector showed signs of recovery, but conditions varied greatly by region.

This is according to a recent member survey by the hospitality association, FEDHASA. Data indicates that while the Western Cape saw strong demand in line with expectations, KwaZulu Natal showed unexpected resilience despite facing challenges threatening its key beach tourism assets.

The country’s hospitality results align with FEDHASA’s preliminary findings which it shared with Tourism Update earlier in January.

“The Western Cape once again proved itself as the country’s premier domestic and international tourism destination this past December,” said Rosemary Anderson, FEDHASA National Chairperson. “Occupancy rates, room rates, and visitor spending met or exceeded pre-pandemic levels in many areas.” 

However, the picture was more mixed in KwaZulu Natal. “Given the recent pollution issues that impacted popular swimming beaches, we feared the worst heading into the holiday season,” said Anderson. “Yet we were pleasantly surprised to see many establishments report better-than-expected occupancy and revenues over December.” 

Anderson credited KwaZulu Natal's tourism industry for effectively managing the negative publicity and offering alternative inland attractions and activities unaffected by coastal water quality problems.

While conditions remain challenging in light of global economic uncertainty, these early FEDHASA survey results provide optimism that South African tourism has turned a corner coming out of the pandemic.

“The survey results give us valuable insights into the state of the tourism industry and remind us of the collaborative efforts needed to ensure its continued growth and success. They highlight its importance in delivering excellent service and its vulnerability to external factors,” said Anderson.

“The industry is doing all the hard work to provide quality service and support to guests and visitors. However, we depend on many factors outside our control to deliver a world-class tourism experience – like power, water, infrastructure, and safety,” continued Anderson.

“To remain competitive globally and grow tourism sustainably, we must have strategic collaboration between the private sector and government. With teamwork, we can achieve our shared goals of an industry that drives inclusive economic growth and opportunity.”

KZN battles challenges, emerges resilient

In KwaZulu Natal, particularly in locations like Durban and Umhlanga, many hospitality providers reported decreased or flat turnover compared with last year and pre-pandemic levels. Contributing factors ranged from beach pollution to flooding.

However, FEDHASA highlighted encouraging indicators as well, including longer average guest stays, growth in family travel, and some businesses adapting pricing strategies to successfully drive bookings.

FEDHASA also noted promising signs of recovery in inland areas like the Drakensberg and Midlands, where turnover increased for some operators compared with 2022. This aligns with FEDHASA's perspective on the growth opportunities associated with KZN's diversity in experiences beyond the coast.

In summary:

• Hotels and restaurants in Umhlanga Rocks, Durban, and Durban Central reported decreased or stable turnover in December compared to 2022.
• Respondents indicated a decrease in turnover compared to pre-COVID levels, with only a minority stating it remained the same.
• Turnover in the Drakensberg and Midlands in December either increased or remained the same compared with 2022, suggesting a potential tourism uptick from coastal visitors.
• Respondents shared shifts in turnover compared with pre-COVID levels in 2019, with 33% noting increased profits and 38% indicating decreased profits.
• Positive factors included minimal load shedding and water outages, longer guest stays, and increased family groups.

Western Cape's tourism thrives

The Western Cape yielded more consistently positive metrics, with 73% of surveyed accommodations seeing increased turnover versus the same period in 2022.

Cape Town and destinations like Knysna and Plettenberg Bay saw high demand, while most other businesses maintained stable levels. The restaurant sector also performed well, with over half of respondents reporting increased revenues compared with last year. Most significantly, 63% achieved turnover equal to or exceeding pre-pandemic seasons.

FEDHASA attributes these optimistic indicators in the Western Cape to rising domestic and international arrival numbers and notable improvements in staff retention and service delivery enhancing the guest experience. Cape Town’s Atlantic Seaboard proved particularly attractive to new visitors during the peak season, which FEDHASA sees as a promising outcome of focused destination marketing efforts.

Cape Town International Airport's record-breaking achievement in two-way passenger traffic at its international terminal paid dividends for the destination in December. Wesgro reported that the airport saw over 317 000 two-way international passengers travel through its international terminal that month.

“This impressive passenger number highlights how Cape Town International Airport's investments into expanding its global connectivity and world-class facilities continue to pay off in terms of international tourist arrivals,” said Anderson.

In summary:

• 73% of accommodations in Cape Town and popular holiday spots reported increased turnover in December compared with 2022.
• 10% saw an increase in turnover compared with pre-COVID levels in 2019.
• Restaurants had a favourable performance, with 53% reporting increased turnover and 26% reporting a decrease.
• Most respondents indicated turnover stability or growth compared with pre-COVID levels in 2019.
• Positive aspects included a mix of domestic and international guests, an increase in foreign visitors, and improved staff retention and service quality.

Leading hotel groups paint a broader picture

The Cape Town and Garden Route regions performed very well this holiday season, according to leading hotel groups participating in the survey. Occupancy rates reached 75% across regions – a two percentage point increase over last year. Cape Town saw substantial gains, especially in average daily room rates, with a 16% year-over-year increase.

While occupancy rates remained flat in Cape Town, the higher room rates contributed to the successful season. The Garden Route was also popular compared with traditional demand in KwaZulu Natal, likely due to uncertainty surrounding potential beach closures in the province.

However, inland destinations saw more modest gains, with occupancy rates dipping two percentage points compared with last year.

Overall, South Africa saw gains in both occupancy and rates over last year’s holiday season.

“Continued uncertainty over discretionary income and spending power remains a challenge, but with another year of recovery from COVID impacts, the hotel industry is cautiously optimistic about future holiday seasons if current trends can be maintained. Targeted marketing highlighting South Africa’s natural assets could further boost future domestic and international travel interest,” said Anderson.

Green shoots require government and hospitality engagement to grow

“While challenges remain, the green shoots of recovery we're starting to see in South Africa's vital tourism industry are genuinely heartening,” said Anderson. "With strong leadership, strategic partnerships between government and industry, and collective effort, we believe this sector can thrive as a leading employer and contributor to the economy. But this requires ongoing engagement and nurturing to foster the right conditions for sustainable growth,” said Anderson.

Anderson concluded: “As the voice of the hospitality sector, FEDHASA will continue working closely with stakeholders to help tourism flourish. By sustainably leveraging our country's natural beauty, our people's warmth, and our region's rich diversity, we can revitalise an industry that can drive inclusive growth and opportunity for all South Africans.”