$1.3 billion to be invested in South Africa’s hotel sector [Download construction report]
Cape Town, capital city of South Africa
A new report suggests large investments will be made from 2019 to 2022, bringing the three-year hotel investment total for the country up to nearly $4.8 billion.
A 2019 South Africa Hotel Investment Outlook from JLL forecasts that $1.3 billion will be invested in the country’s hospitality sector this year.
Planned investments for the coming three years will total roughly $4.8 billion and will add up to 3,900 new hotel rooms around South Africa.
This report also highlights that there has been a shift in the way capital is funnelled into the hotel sector in the country, with many opportunistic and disruptive activities driving the increase in development.
Despite an uptick in development there, South Africa’s hotel sector has not managed to avoid poor-macroeconomic sea change in recent years.
This is highlighted by a decline in revenue per available room (RevPAR). In 2018, that number dropped by 1.4%.
Experts cite lacking business confidence and pressure on government travel as a reason for the weak development and negative growth in RevPAR.
The report also draws attention to the emergence of new investors.
Many of them have been successful at disrupting the sector with innovative lifestyle concepts which offer a compelling value orientated package.
Speaking on disruptive operating models, Xander Nijnens, Head of Hotels and Hospitality at JLL South Africa, said, “Between higher development costs, the density of full-service branded hotels in major markets, and the higher operating costs of full-service vs select service hotels, the road to growth and scale is changing for hotel operators. Many new entrants have successfully disrupted the market by having a unique and innovative concept at a more affordable price point.”
Let’s take a look at a few other projects currently underway in South Africa:
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