Hospitality Consulting Research of the Cape Town Market

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Hospitality Consulting Research of the Cape Town Market

Research into the Cape Town hospitality market indicates that the combination of 1 000+ new rooms in 2017, a contraction in demand due to the Cape Town Water crisis, and continued economic and political instability saw occupancy in the City decline.

The hospitality consulting research highlighted that in each month between January and August, occupancy levels were lower than in the same months in 2017. March and April showed the biggest declines with a 10,6% and 12% decline in occupancy respectively.

It is interesting to note the connection between press releases on the water situation and the subsequent decline in travel-related credit card bookings to Cape Town (flights and accommodation). The hospitality consulting analysis of Cape Town Tourism’s data showed that after each decline, market recovery did occur, however, after the announcement of Day Zero, international bookings decreased by 20,9% when compared to the previous year. Key source markets showed the biggest decline in bookings, including the United Kingdom (24%) and the USA (22%).

This hospitality consulting data is also supported by research from hoteliers. Respondents indicated that although new supply had affected the market, a decline in demand from group tours, who had cancelled their Cape Town trips due to the water crisis, also had a negative impact.

On a positive note, however, the hospitality consulting analysis of the STR figures published in September 2018 indicates that the declining trend could be over. September 2018 indicated an equivalent occupancy rate to that achieved in September 2017. Considering that September represents the movement towards the beginning of the peak season, it is hoped that the new supply is gradually being absorbed and that the market occupancy will grow again.

According to our hospitality consulting experts at HTI Consulting, new supply is planned to enter the market in the short term, including the 186-room AC Hotel by Marriott. However, discussions with Cape Town Tourism and hoteliers in the market indicate that after the 2019 elections, full market recovery is expected and from 2020 onwards, a return to more positive operating conditions is expected.