The hospitality sector is poised for significant growth because of strong interest in local hotel assets, says global hospitality consulting and services group HVS.

According to the World Travel and Tourism Council, the direct contribution of travel and tourism to GDP in SA was R113.4bn in 2014 (3% of GDP). The contribution is expected to grow 4.6% per annum to R184.7bn (3.4% of GDP) by 2025, reflecting the economic activity generated by industries such as hotels and airlines.

HVS managing partner in Cape Town Tim Smith said on Friday, 15 July, that there was a real demand from prospective hotel investors for local assets. There was also optimism that the industry on the continent would grow, he said.

It was this potential that had led to the decision by HVS to set up shop in Cape Town as a springboard into the rest of Africa, Smith said. HVS undertakes valuations for new ventures and handles feasibility studies.

Smith said that following the post-World Cup slowdown, more companies and individuals had overcome doubts about risk and were prepared to invest in hotels. Occupancies reached a low of 53% in 2011, compared with 72% in 2007 before the global downturn.

“After the 2010 World Cup, there were too many hotel rooms and it took four years for the oversupply to be absorbed “¦ in the past two years, trading has been positive,” Smith said.

The Carlson Rezidor Hotel Group’s Marc Descrozaille announced in June that two new hotels would open in Cape Town in the next 10 months and another in Polokwane, highlighting the multibillion-rand investment the group is making in SA. Descrozaille said the company hoped to build 20 hotels in Africa by 2020.

The Hospitality Outlook: 2014-18 report by PwC says that although SA’s economy is facing headwinds, the hospitality sector is poised for growth in the next five years, in the wake of a number of inbound travellers into the continent.

Source: Business Day

About the Author Tshepo Makhudu

I have a passionate interest in all matters to do with hospitality and coomercial property.

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