Johannesburg - For the first time since 2009, the South African hospitality industry demonstrated good growth last year. And despite the economic headwinds, PricewaterhouseCoopers (PwC) predicts the sector will grow more in the next five years.
The 2014 to 2018 hospitality outlook report, which the firm published yesterday, showed that foreign overnight visitors increased by 3.9 percent in 2013. Although this represented a decline from a 10.2 percent growth in 2012, PwC noted that it still reflected continued growth in foreign travel to South Africa, a trend that matters as more business travellers are going directly to their destinations in other parts of the continent.
“Everybody is aware of the difficult times that the industry has faced since 2009. For the first time, there is good growth. It’s not fantastic growth but good, solid growth,” said Nikki Forster, PwC’s leader of hospitality and gaming.
The declaration of Nigeria as Africa’s biggest economy this year and the fact that its gross domestic product and that of its neighbours was growing faster than South Africa would not hurt local tourism prospects, Forster reckoned.
“There is so much economic activity happening in Africa, especially west Africa and yes people will be travelling directly to these countries but South Africa will still be a hub.
“South Africa is more stable compared to many countries in Africa even though we have the strikes. Yes in west Africa there are new hotels… the whole place is full of construction but South Africa has to ensure that it continues to capture its market,” she said.
Visitors from other countries in Africa made up 72 percent of all foreign visitors to South Africa and had increased by 3.3 percent from 2012.
While PwC projected that Nigeria would be the fastest-growing market for the hospitality sector over the next five years with 22.6 percent compound annual gain, it expected that the overall occupancy rate in South Africa would increase by about 58.4 percent by 2018. South Africa was expected to expand at a 10.7 percent compound annual rate overall.
Although the report projected that guesthouses would be the fastest-growing category in respect of the availability of rooms, hotels would benefit more with occupancy rates expected to overtake guesthouses, bush lodges and guest farms, reaching 71.1 percent in 2018.
The PwC outlook featured four countries: South Africa, Nigeria, Mauritius and Kenya. It is based on analysis of Smith Travel Research historical data, as well as local country data combined with other information on industry trends.
To make the projections, countries’ projected economic growths are factored in and so are developments that would affect tourism and hospitality trends such as global events and new hotels on the pipeline.
The projections are normalised for short-term or one-off scenarios that affect previous years’ figures, like rand weakness or soccer events.
Besides its title as Africa’s gateway, what sets South Africa apart from the other featured markets was its ability to lure business and holiday travellers.
Nigeria for instance, was principally a business destination. Mauritius was principally a resort market. And Kenya attracted eco-tourists and offered safaris and beaches. It was also currently challenged by terrorism, which discouraged visitors. Kenya would be the slowest growing of the four countries at 2.5 percent compound annual rate and Mauritius was projected to grow at 4.6 percent.