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Hotel tenancy, income set to recover in 2022

by DION HENRICK in Cape Town
CAPE TOWN – SOUTH Africa’s hotel sector is projected to improve in the current year as COVID-19 vaccination progresses and the virus threat lowers.

However, it will be an uphill task to return to the high levels recorded before the pandemic.

The Statistics South Africa release of November 2021 preliminary monthly tourism statistics show the sector to be slowly clawing its way out of the so-called deep hole created by related lockdowns in and the accompanying recessionary impact back in 2020.

On a year-on-year growth rate basis, total hotel sector income was a strong 95,4 percent.

John Loos, Property Sector Strategist at FNB Commercial Property Finance, said that was unsurprising given that this income was coming off a low base compared with 2020 “lockdown year” levels.

“We would expect hotel occupancy and income improvements to continue in 2022,” he said.

“The assumption is that foreign visitors will be freer to visit as vaccine rollouts progress, across the world as well as in SA, and the virus threat recedes.”

Loos said as the economy recovered, so too should domestic households’ and businesses finances somewhat.

Emnotweni, Nelspruit, Mpumalanga

“But we may not see 2019 levels of hotel revenues returning just yet, especially not in real (inflation-adjusted) terms, with not all foreigners happy to travel, and not all business travel coming back at all.”

Meanwhile, despite the aforementioned improvements, total hotel industry income in November 2021 was still 37,7 percent below the income for November 2019.

As at November 2021, the national occupancy rate was 33,2 percent, still well-below the 56,4 percent rate for November 2019.

“It isn’t only a lower occupancy rate that constrains hotel income,” Loos said.

It is a more constrained client financial environment too.

The average hotel income per stay night in November 2021 was still 16,7 percent down on November 2019 levels.

– CAJ News

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