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South Africa’s 5-star segment on the mend

Profile Photo By: H L
October 29, 2013

South Africa’s 5-star segment on the mend

Grand Hotel Photo: Rainer Sturm  / pixelio.deSouth Africa?s 5-star hotel sector, after experiencing substantial decline between 2009 and 2011, recorded a national average RevPAR annual increase of 15.6% in 2012 and is continuing the trend in 2013 with a 16.8% increase through August.

?In 2012 the RevPAR growth of 15.8% in the Sandton 5-star market was ahead of the Cape Town growth of 12.4% during the same period,? said Joop Demes, CEO of Pam Golding Hospitality, Cape Town, citing STR data. ?However for the first eight months in 2013 this has changed substantially with the Mother City reflecting a further year to date RevPAR growth of 21.4% while Sandton reflected 11.7% growth.?

Demes said one of the star performers in the 5-star hotel market in Cape Town is the privately owned and managed Cape Royale Hotel. Now only in its fifth year of full operation, it achieved an impressive 89% average occupancy for the first nine months of 2013, while this hotel?s average growth in RevPAR during the last two years has been 33% on average.

In the city of Johannesburg, the 5-star Saxon Hotel is achieving one of the highest average room rates of city hotels on the African continent, with total revenue for the first three months into their new financial year ended September 2013 up 44% compared to the same period last year.

Demes said that it is fair to say that business confidence has driven destination preference, especially with South Africa being a long haul market. With Sandton being predominantly a business ? and increasingly a business tourism (conferencing) destination, it stands to reason that business sector driven growth resulted in a higher level of recovery in Sandton in 2012. The lag in Cape Town in 2012, being mainly a leisure destination, translated into a substantially more aggressive recovery in Cape Town in 2013.

?To obtain a better understanding of what has been driving 5-star hotel performance in South Africa one needs to consider and analyze RevPAR,? Demes added. ?Occupancy at 5-star hotel level has increased by a substantial 10% in comparison to 2012 while the 2013 year to date performance reflects a further growth of 7.9% in relation to the same period the previous year.?

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Source Hotels Mag,

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