South Africa Hotel Sector Enjoying Revenue Increases in 2012

South Africa Hotel Sector Enjoying Revenue Increases in 2012

Vacation News » Middle East and Africa Vacation News Edition | By Michael Gerrity | April 5, 2012 9:20 AM ET

According to STR Global, South Africa saw revenue per available room (RevPAR) increase by 13.6 percent for the first two months of this year, reaching ZAR542.07.

The last four months showed double-digit improvements in occupancy and RevPAR following more muted performances after the country hosted the 2010 FIFA Football World Cup, which were driven by additional supply entering the destination and increasing competition.

South Africa's major cities of Johannesburg (including Sandton) and Cape Town reported increasing RevPAR for the first two months of 2012 with 14.5 percent (ZAR498.59) and 12.7 percent (ZAR799.02) growth, respectively. This followed a more challenging 2011 which saw declining RevPAR for the two markets, mainly led by decreasing average daily rates (ADR).  Johannesburg's RevPAR dropped 23.4 percent (ZAR475.45) and Cape Town's RevPAR declined 7.7 percent (ZAR568.17) for year-end 2011.

"Prior to the 2010 FIFA World Cup, both Johannesburg and Cape Town saw increased new supply, which put pressure on the market post-games and was reflected in the hotels' performance", said Elizabeth Randall, managing director of STR Global. "Hoteliers are now seeing growth in both rate and occupancy. This is good news, as improved demand since the second half of 2011 has led to increased RevPAR across South Africa. During the first two months of 2012, we have seen some of the major markets experiencing double digit RevPAR growth".

Supply and Demand change by month

Looking at the two cities, particularly at the Luxury and Upper Upscale segments in more detail, it shows a stronger RevPAR growth for the Luxury and Upper Upscale hotels in Johannesburg, which are mainly based in Sandton. Whilst new supply has remained flat since June 2011, in these segments demand growth increased by 21.8 percent.  Benefiting from increased occupancy, RevPAR grew by 19.3 percent to ZAR789.56 year-to-date.

In Cape Town, increased occupancy and rate in the Luxury and Upper Upscale segments led RevPAR growth to increase by 13.8 percent (ZAR1338.44) YTD. Minor changes in supply, as well as double-digit demand growth (+10.1 percent) YTD helped occupancy reach 70.0 percent (+10.5 percent).

STR Global tracks more than 40,400 rooms across the country.

RevPAR change year-on-year (%)

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