South Africa: Persisting tough trading conditions affecting tourism 

Jul 20, 2016
PRETORIA, South Africa – The Tourism Business Council of South Africa reports that the persisting tough trading conditions in the South African economy are affecting businesses in the sector and have led to below normal levels of business performance as recorded in the 2016 Quarter 2 Tourism Business Index. However, the Travel and Tourism industry being the resilient sector that it is, both locally and internationally, role players have expressed hope of improved performance going forward.

These are the sentiments highlighted in the latest results of the Tourism Business Index (TBI), published today by the Tourism Business Council of South Africa (TBCSA). The report shows that businesses in the travel and tourism sector were trading under tough conditions in Q2, recording an index score of 78.9, significantly below the score of 100 points, which indicates normal business performance levels. The score is also 7.3 index points below than the 86.2 forecasted for the second quarter of 2016.

Commenting on the outcomes of the report, TBCSA CEO, Ms. Mmatšatši Ramawela, says that the Q2 results is a clear indication that the trading environment is tougher out there hence the results that are even lower than what we were expecting in the sector following on from the impressive results of Q1. It just shows that our recovery as a sector is going to be an even bumpier ride, considering all the added pressure inherent in the broader economy, which will no doubt affect our sector. We still have the after effect of Brexit to contend with, considering that both the EU and the UK are amongst our primary source market for both our business and leisure travellers,” says Ramawela.

Comparing the TBI with other economic indices in South Africa, it is apparent that there is a general trend of low confidence across South Africa’s economic landscape. The Q2 2016 results of the RMB/BER Business Confidence Index fell to a score of 32, which is below the normal confidence levels (a score of 50 indicating normal). On a slightly positive note, the SACCI Business Confidence Index (BCI) showed a slight increase in the quarterly average (from 93.1 to 94.1) in Q2 2016, although the overall trend is still downward from 2015. This being the case, it is going to be critical for role players in the tourism sector to “tighten” their belts and work harder to make South Africa a compelling proposition all around.

Source: eTN Global Travel Industry News 

HVS Cape Town: Hotel assets attract investor interest

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

Carlson Rezidor continues to lead Africa’s hotel pipeline

Carlson Rezidor, one of the world’s largest and most dynamic hotel groups worldwide with over 1,400 hotels in 115 countries, is accelerating its growth strategy in Africa. The group has opened five Radisson Blu hotels in the first six months of 2016 and signed four new hotels including the first Quorvus Collection in Africa. The group is also entering its 28th country in Africa and taking the Park Inn by Radisson brand to the Indian Ocean islands.

In 2016, Carlson Rezidor Hotel Group opened five Radisson Blu properties serving the upper-upscale segment: Radisson Blu Hotel Nairobi Upper Hill in Kenya (271 rooms); Radisson Blu Hotel, Marrakech Carré Eden in Morocco (198 rooms); Radisson Blu Residence with 187 luxury hotel apartments in Maputo, Mozambique (the group’s first residence concept in Africa); Radisson Blu Hotel Abidjan Airport, Ivory Coast (261 rooms) and Radisson Blu Hotel 2 Février in Lomé (320 rooms), host of the first Africa Hotel Investment Forum in West Africa in Togo.

Speaking at the opening of the Africa Hotel Investment Forum, Wolfgang M. Neumann, President and CEO of The Rezidor Hotel Group said, “Africa is Rezidor’s biggest growth market. Our group’s total portfolio comprises 69 hotels in 28 countries, with over 15,000 rooms in operation or under development. Radisson Blu leads the way with more hotel rooms under development than any of the other 85+ hotel brands active in Africa today. Our ambition is to be the leading player in the travel and tourism sector across the continent.”

Carlson Rezidor also announces the signing of its first Quorvus Collection in Africa: the 5-star, 244-room luxury Emerald Grand Hotel & Spa in Lagos, Nigeria. The group also signed a new Radisson Blu Hotel Harare in Zimbabwe (245 rooms), a Radisson Blu Hotel in Durban Umhlanga (207 rooms) and a Park Inn by Radisson in Quatre Bornes, the new commercial hub of Mauritius.

Rezidor’s Executive Vice President & Chief Development Officer, Elie Younes added: “In the last 24 months, we have signed a new hotel deal in Africa every 37 days. And it’s not just about signing hotels; we are delivering our pipeline. We have opened a hotel in Africa every 60 days. In South Africa alone, we now have 14 hotels. In 2016 and beyond, we aim to maintain this great momentum by opening four more hotels in the second half of 2016.”

Hosted by the Government of Togo, Africa Hotel Investment Forum will focus on hotel development and finance in Africa. How to drive tourism and attract more than just the business traveler. The event connects hotel developers, hotel owners, hotel groups, banks, equity funds, property funds, hotel consultants, advisors and hotel professionals from the international and local markets, driving investment into hotel projects across Africa.

“The African continent is a powerhouse of exponential growth of the hotel industry”, said Elie Younes. “Rapid urbanization and economic growth, combined with favorable demographics, has resulted in a shortage of quality internationally branded hotels. This means there are huge opportunities for sustainable and quality growth for world-class international hotel operators like Carlson Rezidor Hotel Group.”

23 JUNE 2016

Hotels: Joburg experiences double-digit growth whilst Morocco falters in April

Johannesburg, South Africa, experienced double-digit growth in occupancy (+12.1% to 60.9%) and RevPAR (+21.6% to ZAR553.91). ADR in the market was up 8.5% to ZAR909.72 The market’s occupancy was helped by a 2.2% decrease in supply. The depreciation of the South African Rand against the U.S. dollar and inflation has led to 33 consecutive months of year-over-year ADR increases in Johannesburg.

Morocco reported an 8.2% decrease in occupancy to 57.4%, an 8.3% drop in ADR to MAD1,157.28 and a 15.9% drop in RevPAR to MAD664.24.

Source: Hotel News Now

Snap Survey – Spatial Planning And Land Use Management Draft Bill of 2011

The Constitutional Court will make a final ruling on the Development Facilitation Act in June 2012, which could result in this Act being repealed. This could mean that Development Tribunals would no longer be able to make decisions on land development applications. In the absence of the DFA, the Spatial Planning And Land Use Management Act would have to have been put in place. Should the new Act not be in place by then, development applications would then have to be made in terms of the legacy Townships Ordinances.

Retail Centres And Online Shopping Morphology

Is it conceivable that some day in the future we will be able to visit retail facilities like shopping malls without leaving the comfort of our homes? I would dare to suggest that this is not at all inconceivable. Recent and certainly and ever accelerating technological advancements have made this type of project possible. At the alpha or prototype development phase such technologies exist. An example of this is the “Twister”, which allows users to experience a three-dimensional, true-to-life reality of their travel plans and wishes through the use of multimedia virtual reality technologies and the Internet. What are the reasons that would possibly make it a compelling case for a company to embark on such a project and the shopper to support it commercially? Would such a project find place in the retail space and possibly create competition for shopping facilities? Well, let us briefly look at the retail environment over the past few years.

The recent financial crisis, which has recently started to look like it would be making a return, has devastated many jobs and slashed many disposable incomes through job losses. Consumers have as a result opted to reduce their spending drastically, if not by force. Tied to the financial crises of individuals, travel to the retail facility is increasingly being seen as a luxury. Most retail facilities are well designed in terms of parking facilities and the entry and exit thereof, whereas others are just a major challenge and a headache. For those that are more environmentally conscious, the prospect of putting more greenhouse gases into the atmosphere is most repugnant if one can do most of their shopping online.

The article entitled “Online boom set to boost SA commerce” which was published on page eight of the Sunday Times of 8th August 2011 provides some evidence of the online shopping phenomenon that is sweeping the South African shopping landscape. A most recent article was published on http://www.eprop, the trusted and one of the most frequented property websites in South Africa entitled The Online Retail Red Herring? This title might be a bit misleading as the fact of online shopping is a reality, even as the content therein attests to such.

In 1995, probably earlier, the Internet spread much fear and anxiety among many property owners, investors and retailers alike. They started to imagine a world where their customers would stop patronising their facilities, preferring instead to do all their shopping via the Internet. Back then, the internet was still in its infancy. Data was extremely expensive and browsing speeds were nothing like the kind of speeds we are getting today, and these need to improve some more. The Telkom monopoly was well-entrenched and the industry was completely hamstrung. The industry has now been deregulated to some extent and new players are bringing about increased competitiveness. Whereas this fear may have been overstated then, now it should be taken a bit more seriously.

The following maps illustrate the proliferation of data cables that have recently been landed on our shores. We have all been watching much excavation taking place on our pavements as the fibre network is being extended in rapid fashion in line with the submarine cables. The satellite footprint on the continent is also spreading, albeit with some latency issues. The alternatives are starting to become widely available. Seacom has recently reported that it will invest some R100 million in their submarine cable due to increasing demand. On the other hand, access to this increasing capacity is being facilitated by the latest technologies consumer devices like smartphones and tablets. The cherry on top is that these gadgets are getting better and simpler to use.

Submarine Cables To South Africa






Satellite Footprint – Southern Africa








The reality that now faces retailers and investors alike is that in addition to the risk factors that impact on the sustainable lifespan of a new building now include economic obsolescence arising as a result of technological advancement. The concept of “online retail morphology” is increasingly looking like a reality. Internet hotspots are proliferating. There is now talk of a wireless Internet standard the could make a 31000 kilometre radius hotspot possible. Whilst it seems like a long shot idea, who is to say that some or other company could not take advantage of such an idea and make profitable business out of it? The concept of Cloud Computing has started to gain a foothold on the South African business landscape. For example a recent article spoke about a relationship that was entered into between an online shopping website and a leading regional supermall in Gauteng. This company, Africa Trade Route, proposes a “cloud computing” type of concept, whereby they “offer space to existing shop owners…who want to penetrate the online market”.

Retailing seems to be “morphing” online, slowly but surely. There is no need for it to happen at the expense of retail facilities.

The Legacy Of The Development Facilitation Act 67 of 1995

The Department of Rural Development and Land Reform has marked the Development Facilitation Act No. 67 of 1995 (DFA) for repeal. This particular piece of legislation had as its main objective the acceleration of the delivery of housing to the poor of South Africa, post the first democratic elections of 1994. The DFA became necessary because the process of approving land use applications, under the control of municipal authorities across all property types, was painfully slow. Despite the promulgation of the DFA, housing delivery has not caught up with the growing population numbers of the targeted population sector. In the meantime, however commercial and high value residential developments accelerated at an unprecedented pace in one of the largest property booms in South Africa, to the dissatisfaction of the municipal managers.

During the period 1998 to 2007, South Africa experienced an unprecedented property boom. This anti-poor property boom brought about the current conflict between the DFA and the legacy legislation, this being the Townships Ordinance 15 of 1986 – anti poor because it did not assist in the provision of housing for them while diverting bulk services to these luxury developments. It did create some temporary job opportunities in the construction sector though.

When the DFA was enacted the Ordinance was not repealed. The drafters at the time hoped that for the sake of meeting the promises made to the electorate, the two pieces would co-exist harmoniously side by side. The other reason for not repealing the Ordinance was that the target areas where the accelerated development was required did not have town planning schemes, which the established suburbs had. On the other hand DFA had time frames were incorporated in its provisions within which the municipalities were forced to have reached certain milestones in the application assessment process.

The DFA however ended up being used by commercial and luxury residential developers to circumvent the townships ordinance to get approval for their developments. Clearly, the target population could not benefit from the latter’s developments. Even worse, these developments were perceived to be creating urban sprawl and bulk utility services were being rapidly depleted, to the detriment of the target communities. Such a state of affairs is not how the politicians wanted things to go, so the DFA had to go.

The municipal planners and the politicians were now of one mind in that the DFA did not meet their needs. The municipal authorities went to the law courts where they lost some major cases and the DFA stayed, if only for a while. This Act is about to be replaced by the Spatial Development Act of 2011, currently in the Draft Bill stage. Only time will tell whether this new piece of legislation will go the full distance to becoming an Act of Parliament. A very important Bill was also put through Parliament some five years ago, by the name of the Government Immovable Asset Management Act, but it was never enacted. Another important government initiative which was started but never seen through is the Urban Renewal Project in the Tshwane Central Business District.

Municipal planners and developers will always be positioned on opposite poles of human behaviour. While developers have traditionally been seen as the evildoers who have excessive profits as their only motive, at the expense of the public, municipal planners and environmentalists have been seen as the defenders of the public good. Certainly with the last property boom most developers did make superprofits, however, the ancillary costs, such as land holding costs during a lengthy low activity period, were also very high. Consumer behaviour is something very difficult, if not impossible to plan for. Developers are people who have chosen a career path of studying consumer behaviour and then planning for meeting people needs well in advance. For this, they are often required to take extreme risks, for which it is only fair that they are rewarded accordingly.  Authorities and planners can never dictate the direction of development. Their duty should be the guidance of the development process in order to create a harmonious environment for the benefit of all society, be it the end-user or the supplier. If the municipal planners were truly dynamic, then there would not have been a need for the DFA after all.

The DFA is a very effective piece of legislation. It has helped to facilitate one of the strongest property booms in South Africa. It did a good of exposing the weaknesses inherent in the Ordinance. It remains to be seen how the new Bill will consolidate the strengths of and minimise the weaknesses of the DFA and the Ordinance to take advantage of worthwhile development opportunities.