The average cost of a 3, 4 and 5-star hotel room in South Africa right now

PwC has released its Hotels outlook for South Africa over the next five years.

The report was based on historical data derived from the Smith Travel Research (STR) data and local country data combined with other information on industry trends.

It found that foreign tourism rose 2.4% in 2017, building on its 12.8% increase in 2016.

“The gain in 2017 was particularly impressive as it was achieved without any boost from a weak rand making it less expensive to travel to South Africa and at the same time as the lifting of visa requirements in China and India in 2016 that made it much easier for people from those countries to visit South Africa,” PwC said.

The growth from the various non-African markets resulted in an overall 7.2% increase in foreign visitor numbers from outside of Africa.

Of the top ten non-African countries, Brazil, France and Germany recorded the largest increases. The number of visitors from Canada, the United States, the Netherlands and Australia posted mid-to-high single digit increases, while the United Kingdom held steady and China declined.

Of foreign visitors coming to South Africa from African countries in 2017, the largest number came from Zimbabwe at 2 million, followed by Lesotho at 1.8 million and Mozambique at 1.3 million.


Hotel rooms

The number of available rooms rose 1.3% in 2017, the largest increase since 2011.

This follows a number of major openings including the Radisson Blu Hotel & Residences and Radisson Red V&A Waterfront in Cape Town and the Sun International Meropa in Polokwane – each of which is a four-star hotel.

“We expect an even larger increase in available rooms in 2018, accounting for a 1.8% gain, with Menlyn Time Square in Pretoria entering the market and the refurbished Grandwest in Goodwood and Carnival City Resort in Brakpan reopening in 2018,” PwC said.

Scheduled openings for 2019–21 include:

  • The Radisson Blu Oceans Umhlanga in Durban
  • The Marriott Johannesburg in Melrose Arch
  • The Marriott Executive Apartments in Johannesburg
  • Two Hilton Garden Inns (one in Durban and another in Malelane),
  • The Novotel Sandton Summit

Three-star hotels

  • Average daily rate: R980

Three-star hotels currently account for 36% of all available hotel rooms in South Africa and 31% of total hotel room revenue.

The average daily rate (ADR) for 2017 was R980.

“We expect guest nights to drop slightly in 2018, stabilise in 2019 and then rise in 2020 and 2021 as the economy picks up, averaging 0.4%, compounded annually, for the forecast period as a whole,” PwC said.

“The number of available rooms will increase at a 0.6% annual rate, resulting in a modest drop in the occupancy rate to 64.6% in 2022 from 65.4% in 2017. The ADR will rise to a projected R1,190 in 2022, growing at a 4.0% compound annual rate.”


Four-star hotels

  • Average daily rate: R1,445

With a number of four-star hotels opening in 2017, available rooms increased 1.8% – the first rise since 2013.

However ADR growth slowed markedly, rising only 3.2% in 2017, the slowest gain since 2012 and well below the 8.5% rise in 2016.

“Most of the hotel openings scheduled for the coming years will be four-star hotels, leading to a projected 2.4% compound annual increase in available rooms over the next five years, 76% of the total increase in available rooms for all hotels in South Africa,” PwC said.

“We expect guest nights to rise as tourism picks up. Most of the projected growth in guest nights, 60%, will be in four-star hotels, up 2.7%, compounded annually. That increase will be a bit faster than growth in available rooms, and the occupancy rate will edge up from 66.1% in 2017 to a projected 67.1% in 2022.

“We expect ADR growth to remain modest with a projected 3.4% compound annual increase, from R1,445 in 2017 to an estimated R1,710 in 2022.


Five-star hotels

  • Average daily rate: R2,960

“While ADR growth for five-star hotels slowed in 2017, as it did for the market as a whole, the 8.8% increase was still well above the increase for three- and four-star hotels, reflecting the impact of the high occupancy rate for five-star hotels,” PwC said.

“We expect somewhat slower growth in the near term, followed by faster increases during the latter part of the forecast period, when occupancy rates will surpass 80%.

“The average five-star room in 2022 will cost R4,375, up 8.1% on a compound annual basis from R2,960 in 2017.

According to PwC, five-star hotels as a whole in South Africa accounted for 16% of total hotel room revenue in 2017, more than three times their 5% share of available rooms.


Read: These are the 10 best luxury apartments in South Africa

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