Last week Thursday, I was invited by PwC to join in a press briefing at Rosebank's 54 on Bath whereby PwC shared the findings of their Hotels Outlook 2018 – 2022 report.
The Outlook provided an overview of how the hotel industry in SA, Nigeria, Mauritius, Kenya and Tanzania is expected to develop over the coming years. It also included some interesting insights on tourism, the complex cybersecurity risks that face the industry today and the impact of the drought on the SA hotel sector.
Pietro Calicchio, Hospitality & Gaming Leader for PwC Southern Africa, chaired the briefing. “Tourism to the African continent has proven to be resilient in the face of economic and political uncertainty, impacts of droughts and other regulatory changes," he said. "The opportunities are aplenty for this industry to enjoy further growth albeit at a more modest pace.
"However, as we continue to see there are also a number of challenges facing each country. This is an industry that is reactive to the smallest change in political, regulatory, safety and sustainability matters.”
There were a few interesting findings from the report:
- The report projects that hotel room revenue for the five markets as a group will increase at a 7.4% compound annual rate to R50.5 billion in 2022 from R35.2 billion in 2017.
- South African hotel room revenue is expected to expand to R21.8 billion in 2022, up 5.6%, compounded annually, from R16.6 billion in 2017. The growth in hotel rooms in South Africa, remains similar to that forecast in our 2017 Hotels Outlook with an additional 2 900 rooms to be added over the next five years. We also forecast occupancy rates to continue to grow over the forecast period and to reach 62.5% in 2022.
- International visitor numbers to South Africa continued to grow with a 2.4% increase overall. The outlook for 2018 remains positive albeit at lower percentages than experienced in 2016. The report projects that the number of foreign visitors and domestic tourism will increase by 5.3% in 2018. The total number of travellers in South Africa is expected to reach 19.5 million by 2022, a 4% compound annual increase from 16 million in 2017. “There is also continued debate on further relaxation of visa requirements for international visitors and this may impact on our forecast growth,” said Calicchio.
- After jumping 38% in 2016, visitors from China to South Africa fell 17% in 2017. Travellers from India rose a modest 2.7% in 2017, well below the 21.7% increase recorded in 2016. Of non-African countries the UK is still the largest source of visitors to South Africa at 447 901 in 2017, contributing to the overall growth of 7.2% in visitors from non-African countries in 2017. Of African visitors, the largest number came from Zimbabwe at 2 million, followed by Lesotho at 1.8 million and Mozambique at 1.3 million.
- Nigeria is expected to be the fastest-growing country over the next five years. A number of new hotels are scheduled to be opened during this time. Continued improvement in the domestic economy will also lead to faster growth in guest nights. Kenya, Tanzania and Mauritius should be the next fastest growing, with compound annual increases of 9.6%, 9.1% and 7.2%, respectively.
- South Africa is projected to be the slowest growing market with a 5.6% compound annual increase in room revenue.