Hospitality Industry In South Africa - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Hospitality Industry In South Africa - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

South Africa has been of the top tourist destinations in the African continent. However, the COVID-19 pandemic has had a severe economic impact on South Africa's hotel sector, with a number of hotels facing bankruptcy and permanent closure. As governments implemented extraordinary measures to contain the virus, such as travel restrictions and physical separation, the hotel industry came to a halt during the pandemic. Job losses, reduced pay, and layoffs have all had a significant impact on employment. Concerns for hotels include cash flow, travel restrictions, guest cancellations, low consumer spending, and the industry's overall economic uncertainty, during the COVID-19 pandemic. However, the measures were subsequently lifted in April 2022 and the tourism industry has started recovering. As per Bureau for Economic Research, since all Covid-19 restrictions have been lifted, there has been an increase in the number of patrons from the previous quarter, and this is what has caused this growth in the hospitality sector in South Africa in 2022.

The hospitality industry in South Africa is emerging with a rising number of travelers who are visiting the country for business and leisure purposes. According to Stats SA, at the ports of entry and exit into and out of South Africa in April 2022, a total of 1,696,851 travelers (arrivals, departures, and transits) passed through South African ports of entry/exit. A comparison of movements in April 2021 and April 2022 shows that the volume of arrivals, departures, and transit travelers increased for both South African residents and foreign visitors. Arrivals increased by 145.4% for South African residents (from 117,557 in April 2021 to 288,430 in April 2022) In order to accommodate rising travelers, the hospitality industry is expanding rapidly in the country and is scoring dynamic key performance indicators. Africa is at around 2.8 million for 2020 and 2.5 million for 2021, far from the 2019 figure of 10.2 million, let alone the projected figures for the two respective years had the pandemic not occurred. Furthermore, the growth of hotel rooms/keys is growing with an additional 3,500 rooms which are going to be added in the coming years. The short-term home rentals like Airbnb has been growing rapidly in the region.

South Africa has been gaining more significance as the leading convention destination in the continent as Cape Town which is known as the Events Capital of Africa was listed as one of the top 50 convention cities across the globe. According to the World Travel & Tourism Council (WTTC), South Africa's travel and tourism GDP will drive the country's economic recovery over the next decade (2022-2032. According to the WTTC's Economic Impact Report (EIR), the South African Travel & Tourism sector is expected to grow at a 7.6% annual rate over the next decade, far outpacing the country's overall economic growth rate of 1.8%. By 2032, the sector’s contribution to GDP could reach more than ZAR 554.6 billion (7.4% of the total economy), injecting nearly ZAR 287 billion into the national economy. The sector is also expected to create more than 800,000 jobs over the next decade, to reach more than 1.9 million by 2032.

Like their global counterparts, South African hotels are accelerating the adoption of technology to meet customer-driven demand in the hospitality sector. Although, the hospitality industry was hard hit by the COVID-19 pandemic; however, this did allow for business introspection as well as the acceleration of innovation and technology. and with the sector now showing signs of an uptrend, there are opportunities to capitalize on prevailing trends through the continued, enhanced use of these technologies. Hotels are implementing technology that is transforming the consumer experience. Certain technologies are resulting in major benefits and cost reductions in the hospitality industry. The use of near-field field communication (NFC) advanced technologies, infrared technologies, and robots are by far the most important trends in this market. Hotel owners and operators are investing in systems and technologies that automate processes and personalize the guest experience. For instance, in 2021, the Hotel Sky in Johannesburg is the first African hotel to employ robots. It is the first hotel in Africa to use automated attendants. This incorporation of technology in the hotel industry is expected to add growth in the number of visitors in South Africa, this will surge growth in the hospitality industry.

The hospitality industry in South Africa is a combination of international hotel brands and domestically grown brands. The country has several individual hotel properties that are spread across the major cities of the country. ​Key players are focusing on delivering customized and innovative services targeted to gain more customers. The customization is based on factors such as brands of products used, duration of service, and others. ​Some of the key players operating in the market are Marriott International Inc, Accor SA, Hilton Worldwide Holdings Inc, Radisson Hotels, Meliá Hotels International SA among others.

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