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Sector Overview - Hotels
Consistent Upturn In Tourism Bolsters The Hotels Industry
By Shumirai Chimombe
The South African hospitality industry has been experiencing sustained growth in recent years. A report by Research and Markets indicates that the market size of this sector is estimated at USD 1.36-billion in 2024, and is expected to reach USD 1.68-billion by 2029, growing at a CAGR of 4.43% during the forecast period (2024-2029).
This positive growth trajectory is driven by various factors.
Travel And Tourism Sector Makes Rapid Post-Pandemic Recovery
The travel and tourism sector has been recovering at a steady pace since the COVID-19 restrictions in the industry were lifted in April 2022.
South Africa ranked the highest in Africa in the 2024 Travel and Tourism Development Index (TTDI) by the World Economic Forum which was released in May. The country was ranked 55th among 119 countries and scored high for price competitiveness, ICT readiness, natural resources, and travel and tourism socio-economic impact.
According to the World Travel & Tourism Council (WTTC), South Africa’s travel and tourism GDP is expected to drive the country’s economic recovery over the next decade. The WTTC’s Economic Impact Report (EIR) indicates that the sector is expected to grow at a 7.6% annual rate over the next decade, far outpacing the country’s overall economic growth rate of 1.8%. By 2032, the sector’s contribution to GDP could reach more than ZAR 554.6 billion (7.4% of the total economy), injecting nearly R287-billion into the national economy. The sector is also expected to create more than 800,000 jobs over the next decade, to reach more than 1.9 million by 2032.
Consequently, the hospitality industry is experiencing exponential growth as a result of the rising number of travellers visiting the country for business and leisure purposes. The Department of Tourism reported that in 2023, South Africa welcomed close to 8.5 million international visitors of which 6.4 million were from the African continent. This represents a significant increase of 48.9% compared to 2022 arrivals.
According to Statistics South Africa, during the first quarter of 2024 – January to March – South Africa welcomed 2.4 million visitors, representing a notable 15.4% increase when compared with the same period in 2023.
A Prime Business Events Destination
South Africa has gained significance as a leading convention destination, moving up five spots in the 2023 International Congress and Convention Association (ICCA) Global Ranking Report. It has maintained its position as the number one meeting and conference destination in Africa and the Middle East, according to the report. Furthermore, Cape Town continues to maintain its spot as Africa’s premier business events destination and is listed as one of the top 50 convention cities across the globe. Its latest accolade is being recognised as Africa’s best Meetings, Incentives, Conferences and Events (MICE) destination at the 5th Annual World Mice Awards 2024, with Sun City Resort winning Africa’s best MICE hotel.
Technology A Major Driver In Growing The Sector
South African hotels have quickly adopted technology to meet customer-driven demand. The pandemic was a significant trigger for the acceleration of innovation and technology, and hotels have capitalised on this opportunity to enhance their services. Hotels are implementing technology that is transforming the consumer experience such as using digital platforms and online booking services to reach a wider audience and attract both domestic and international guests, as well as investing in systems and technologies that automate processes and personalise the guest experience.
The Hotels market is expected to see an increase in the number of users, projected at 8.43 million by 2029
The user penetration rate is expected to rise from 10.9% in 2024 to 13.2% by 2029
The average revenue per user (ARPU) is expected to be US$174.20
It is expected that 71% of the total revenue will be generated through online sales by 2029
South Africa’s hotels are diversifying their offerings to attract both international and domestic travellers, with a focus on sustainable tourism practices.
Source: Statista
Changing Customer Preferences
Customers in South Africa are increasingly seeking unique and authentic experiences when it comes to accommodation. This has led to a rise in demand for boutique hotels, eco-friendly lodges, and properties that offer cultural immersion. Travellers are also showing a preference for hotels that prioritise sustainability and local community engagement.
Evolving Market Trends
A notable trend in the hotels market is the increasing popularity of luxury safari lodges, especially in regions known for wildlife reserves such as Kruger National Park. These lodges offer high-end amenities and exclusive wildlife viewing experiences, attracting luxury travellers from around the globe. Additionally, the growing focus on sustainable tourism in South Africa has prompted many hotels to implement green practices and support local conservation efforts.
Tourist Accomodation: Statistics South Africa Key Findings, May 2024
Measured in nominal terms (current prices), the total income for the tourist accommodation industry increased by 4,4% in May 2024 compared with May 2023.
Income from accommodation increased by 5,8% year-on-year in May 2024, the result of a 10,6% increase in the average income per stay unit night sold. The largest contributors to the income were: ‘other’ accommodation (10,7% and contributing 3,3 percentage points); and hotels (3,8% and contributing 2,4 percentage points).
Income from accommodation increased by 7,5% in the three months ended May 2024 compared with the three months ended May 2023. The main positive contributors to this increase were: hotels (6,3% and contributing 4,0 percentage points); and ‘other’ accommodation (12,4% and contributing 3,7 percentage points).
Seasonally adjusted income from accommodation increased by 7,6% month-on-month in May 2024, following an increase of 1,3% month-on-month in April 2024.
Income From Accomodation At Current Prices For The Latest Three Months By Type Of Accomodation - May 2024
