The Accommodation Industry in South Africa 2023

Introduction

The tourism accommodation industry, one of the sectors hardest hit by lockdown restrictions, is in recovery.

Tourist accommodation income increased by more than 60% in 2022. Role players are doing well despite energy costs, power cuts, pressure on the discretionary spending of travellers and occupancy still generally lower than pre-pandemic levels. The United Nations World Tourism Organisation expects the sector to return to pre-crisis levels in 2023. Student accommodation is a growing subsector as the shortage of student accommodation has long been a challenge. The Department of Higher Education and Training said there is a shortage of over 400,000 beds at public tertiary institutions.

Opportunities

Demand and further growth in the aparthotel segment.

High demand for student accommodation. Skills development in the hotel industry.

Outlook

The industry is recovering well after the pandemic, and tourist arrivals continue to increase. Occupancy in the general hotel segment is still below pre-pandemic levels and growth is being driven by apartment hotels. Obstacles to accelerated recovery are inflation, power outages, and an economic slowdown. Economists said there is a significantly increased probability of a recession since January. The student accommodation sector offers huge opportunities for investors given the lack of supply and the strong demand.

A key incentive for investors is government support through its funding for low-income students.

Report Coverage

This report focuses on tourism and student accommodation in South Africa.

It includes information on the state of tourism, occupancies, influencing factors, notable players, corporate actions and developments. There are profiles of 48 companies including International companies such as Accor and InterContinental, major local players such as Southern Sun, Sun International and City Lodge, and companies operating in the student accommodation subsector such as CampusKey and Citiq.

Strengths

A variety of established accommodation is available.

South Africa is a popular destination for leisure and business. South Africa is a relatively low cost destination for international tourists. The industry is a significant foreign exchange earner and creates employment.

Threats

Crime is threatening the safety and security of tourists.

High airfares could deter tourists from travelling. Increasing costs due to loadshedding, especially for small establishments. Rampant power outages. Rising cost of utilities. Russia-Ukraine war’s impact on fuel pricing. South Africa’s attractiveness as a travel destination could suffer due to political uncertainty, unrest, and crime.

Weaknesses

Lack of disposable income affects spending on travel and accommodation. Poor road infrastructure affects access to establishments and deters tourists from wanting to visit. Shortage of skills. The industry is exposed to external macroeconomic, and climatic factors.