THE
BUSINESS OF HOSPITALITY
By Joop Demes, CEO Pam Golding Hospitality
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South Africa’s
Hotel Industry performance and resilience
continues to surprise many despite
the industry as a whole experiencing
a 2009 rand value decline in SA Rand
Revpar of 9.8% (revenue per available
room).
City Performance
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A great performance
in the month of December 2009
for Durban. SA Rand Revpar was
up 16.8% for the month compared
to December 2008, which in terms
of 2009 SA Rand Revpar percentage
change pushed Durban ahead of
Johannesburg, Cape Town, Nelspruit
and Pretoria. |
| • |
Durban experienced the smallest
percentage decline (7.2%) in
SA Rand Revpar during 2009 compared
to 2008. |
| • |
The annual decline for Cape
Town was 9.3% and for Johannesburg
10.7%. |
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Provincial Performance
| • |
Free State was the best performing
province if one compares the SA Rand
Revpar in 2009 to 2008, the percentage
decline of 2.9% was only marginal |
| • |
Eastern Cape had a 4.6% decline,
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Mpumalanga had a decline of 8.9%, |
| • |
Western Cape experienced a decline
of 9.5%, |
| • |
KwaZulu-Natal with 10% and |
| • |
Gauteng with 10.8%. |
Room Supply
It is important to note that 2009 saw a
considerable increase in terms of room supply
across South Africa;
we estimate this figure to be in
the region of:
| • |
Average of plus or minus 5.6% including
the growth of guest houses, |
| • |
This includes the increase in B&B’s
& Guesthouses and the conversion
of residential blocks to apartment
hotels. |
| • |
This increase of course directly
dilutes the reported SA Revpar figures.
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Rest of World
How we compare in the region with the rest
of the world is of course very relevant
and makes very interesting reading if we
consider the following:
| 1. |
The region referred to as Africa
& The Middle East produced the
highest global annual US Dollar Revpar
during 2009
a. a figure that outperformed the
Americas with a very material margin
(72.1%),
b. Asia Pacific with a considerable
margin (31.2%) and
c. Europe by 18.4% |
| 2. |
The Southern Africa percentage decline
in US Dollar Revpar for 2009 compared
to 2008 is about half compared to
the percentage decline in both Asia
Pacific and Europe. |
| 3. |
If one considers the areas that
experienced the least decline in US
Dollar Revpar in 2009 compared to
2008, Southern Africa and Northern
Africa respectively hold position
number one and number two, this out
of the 15 key areas in the world.
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| 4. |
The observations in this article
are extracted from an analysis of
the STR Hotel Review for 2009. |
| 5. |
If we however, consider the rand
exchange rate to the dollar at 31
December 2009 compared to the higher
rate at 31 December 2008, the result
is even more profound, as South Africa
as a whole shows no US Dollar Revpar
decline in 2009 compared to 2008.
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Bad Press
A number of rather unfortunate stories
have been written about the five star
market in Cape Town and it is important
to consider 2009 performance of Africa’s
most up market and successful leisure
destination.
Survey Results
Our survey amongst the larger, leading
and well branded five star Hotels
in Cape Town shows a balanced and
pretty stable trading environment
with SA Revpar figures that during
2009 for some have marginally increased
compared to 2008 and for others marginally
declined.
| At this stage definitely
no signs of financial distress
or panic for the Hotels that
we have interviewed. |
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Tough on Some
| • |
There are of course a number of
Hotels, often smaller, newer and perhaps
not in the best location, that have
experienced a rather tough 2009. |
| • |
The average SA Revpar decline for
grade 5 Hotels in Cape Town for 2009
compared to 2008 was 12.8% according
to the STR Hotel Review. |
| • |
But let’s reflect on this
figure a bit more carefully and take
into consideration the substantial
increase of the number of beds that
we have experienced in the Cape Town
five star industry, an increase of
plus or minus 30% at the end of 2009
compared to 2008. |
Major International
City Comparison - Top 5
So how do Cape Town and Johannesburg
compare in 2009 to the major cities
within the region that STR refers
to as Middle East and Africa, a region
that has been outperforming the Americas
and Asia by substantial margins and
Europe by a comfortable margin?
| • |
Johannesburg
and Cape Town both
made it in the 2009 STR Global
Hotel Review top 5, if one compares
the US Dollar Revpar percentage
change in 2009 compared to 2008,
within the Middle East and Africa. |
Caution
A word of caution perhaps - there
is currently, in our opinion, an element
of oversupply of rooms in certain
categories in certain nodes in South
Africa that is however strongly balanced
by a definite shortage of beds in
certain other categories, nodes and
locations. |
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Conclusion
An important consideration for any
type of Hotel is the correct product
in terms of demand and supply but
the most important consideration,
now more relevant than ever before,
is the correct capital cost per key. |
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Pam Golding
Hospitality comprises
Pam Golding Hotels, Pam
Golding Lodges & Guesthouses
and Pam Golding Hospitality
& Tourism Consulting.
Contact: Joop
Demes, CEO - Pam Golding
Hospitality,
Office: +27 (0) 21 852
5155, Tell: +27 (0) 82
883 2231 |
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