In PwC’s African hotel forecast for 2021, its team of hotel specialists discuss the outlook for South Africa. Tourism Update shares the outcome of these findings.

“We project South Africa to be the next, fastest growing market (after Nigeria) with a 9.3% compound annual increase in room revenue, most of which will be generated by rising room rates and continued, but moderating growth in tourism,” says the report.

Research suggests that:

• The number of available hotel rooms will rise at a 0.9% compound annual rate, to 63 900 in 2021.
• Guest nights to increase at a 1.8% compound annual rate to 15.0 million in 2021, with occupancy increasing to 64.3%.
• Overall hotel room revenue is expected to expand at a 9.3% compound annual rate to R24.8 billion (€1,6bn) in 2021.

PwC forecasts that the South African economy is expected to pick up marginally with a 1.6% gain in 2018. “The economy is then expected to grow at annual rates in excess of 2% over the 2019-21 period. Growth for the entire forecast period will average an estimated 1.8% compounded annually for South Africa, slower than the 2.9% projected compound annual increase for the global economy.”

Three-star hotels

Three-star hotels accounted for 36% of all available hotel rooms in South Africa and 31% of total hotel room revenue, in 2016.

“We expect guest nights to increase at a 1.5% compound annual rate, faster than the 0.2% compound annual gain in available rooms. As a result, the occupancy rate will increase to a projected 69.1% in 2021 from 64.6% in 2016,” the PwC report reads.

The stats show that room revenue in three-star hotels will expand at a projected 6.9% compound annual rate to R6.9 billion (€432m) in 2021.

Four-star hotels.

The report states: “We expect more moderate increases in guest nights as growth in tourism slows with increases averaging 2.8% compounded annually.”

Most of the new hotels expected to open in the next few years will be four-star hotels and they will account for 85% of the total increase in available rooms over the next five years.

“Room availability will increase at a 2.6% compound annual rate, and the occupancy rate will increase to 66.4% in 2021. Room revenue is also projected to increase to R8.7 billion (€544m) in 2021, growing at an 8.7% compound annual rate.”

Five-star hotels

The data shows that available rooms have been flat during the past two years and are expected to remain so during the next five years as no new five-star hotels are expected during the forecast period.

The report says, “Room revenue will expand at an 11.4% compound annual rate to R4.2 billion (€263m) in 2021, and five-star hotels will account for 17% of overall hotel room revenue in 2021.”