REPORT: Investment into South African
hospitality sector set for further disruption
JLL has released its 2019 SA Hotel Investment Outlook report at the AHIF Cape Town Briefing today forecasting that R1.9 billion will be invested into new hotels, and around R6.9 billion in total over the next three years. This translates into 3,900 new rooms across South Africa. The report highlights that there has been a clear shift in the way that capital is being deployed into the hotel sector, with a number of opportunistic and disruptive activities driving this increase in development activity.
Despite the uptick in new development, the hotel sector has not been spared from poor macro-economic headwinds in recent years and performance has been challenging, with revenue per available room declining 1.4% for during 2018. Poor levels of business confidence and pressure on government travel has been the primary reason for the weaker trading.
Download the full JLL South Africa Hotel Investment Outlook Report >
The report draws attention to the emergence of new investors, many of which have been successful at disrupting the sector, with innovative lifestyle concepts that offer a compelling value orientated package.
Despite some short-term challenges, the long-term fundamentals of the South African hospitality sector remain strong. While most markets will see further occupancy pressure in the short-term, the success of disruptive new entrants is likely to continue, with hotels on the periphery of core nodes and those not able to meet the changing needs of the consumer likely to come under more pressure through the cycle.
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