Hoteliers expect Sandton’s strong conferencing pipeline, including next year’s G20 Summit, will provide a much-needed boost to flagging average room rates (ARRs) in the precinct.
According to January-May data from Smith Travel Research, five-star hotels in “Africa’s richest square mile” have been grappling with ARRs well below the national average and 23% lower than those achieved in pre-COVID 2019. Sandton’s ARR of R1 411 (€71) is just 49% of the national average. KwaZulu-Natal at R2 867 (€145) and Cape Town at R4 104 (€208) are both comfortably exceeding 2019 levels.
On a positive note, occupancy rates at high-end hotels in the precinct stand at 66%, exceeding the 62% achieved in Jan-May 2019. But, as advisory firm BDO highlights in its 2024 Tourism Trends report, the data indicates hotel operators are “clearly sacrificing rate in favour of occupancy”.
Francois van Heerden, Chairperson of the Sandton Tourism and Business Association (STBA), told Tourism Update that hotels at the top end of the pricing range need to lift their ceilings for the rest of the industry to follow, but we're faced with numerous prevailing challenges.
“Safety remains a key concern in Sandton as does urban decay, control of taxi associations with the need for safe taxi zones and improved marketing of Sandton as a travel destination. Rosebank and Waterfall City are starting to make inroads as new destinations and trendy hubs,” said Van Heerden.
G20 Summit to catalyse MICE sector
Representing the STBA Secretariat, Mandy Watson said a pick-up in events at the Sandton Convention Centre (SCC) over the past six months was highly encouraging, with the momentum carrying over into 2025 and 2026.
“The SCC has a very high repeat business model with clients securing dates by committing several years in advance. Although this limits the space to accommodate new large events, there is an ongoing drive to secure new events into the future and to bring them to the SCC.”
She said securing the 2025 G20 Summit was a major win for the sector.
“Obviously, this is the big talking point at the moment and, although definitely still in the planning phase, an influx of related events and meetings is expected. The benefits of these events will be far-reaching with impact on more than just the SCC as hotels will likely benefit from the influx of delegates coupled with exposure of the country.”
Additionally, the business travel sector is looking to emerge from a period of lower government travel spending and financial support for conferences.
“There seems to be a 'wait-and-see' approach among exhibition organisers and funding is being reviewed far more rigorously than in the past,” added Watson.
She said South African Tourism, the South African National Convention Bureau (SANCB) and the Gauteng Tourism Authority (GTA) could help the SCC attract more international trade shows and events.
A positive outlook for the Sandton precinct is buoyed by major new hospitality investments such as Minor’s first NH Collection property launched on July 1 and the scheduled opening of a Hilton hotel in the fourth quarter of this year, Watson stated.
Call for enhanced marketing
Van Heerden said greater collaborative marketing efforts with government departments and associations are sorely needed.
“As an association with a diverse membership, we have engaged with South African Tourism, the SANCB and the GTA to collaborate and develop Sandton as a destination of note. Unfortunately, our efforts have been fruitless.”
STBA collaborated with the GTA in a dual marketing campaign during the past year but the association was “unable to get any feedback” on its effectiveness.
“We are able to gather information and specials from members pretty quickly so providing products that South African Tourism and the GTA could sell is easy for us,” Van Heerden pointed out. “Our members are constantly looking to get involved in initiatives that will help to drive stronger GDP growth as that would automatically feed positively into everyone's business.”
Enhanced safety and security measures remain a key point of discussion for the tourism and business communities of Sandton.
“The feeling is that increased discussions between the South African Police Services, the Sandton Central Improvement District and other stakeholders in the area would help. Weeding out street forex trading, which stimulates forex thefts, would also help and there seems to be a need to improve the perception of Sandton, Johannesburg and South Africa as a whole,” Van Heerden said.
