Hospitality Research of the 5 Weakest Markets of 2018

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September 30, 2018
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Hospitality Research of the 5 Weakest Markets of 2018

The hospitality research undertaken by HTI Consulting highlights the five markets with the weakest performance for the first six months of 2018. Our knowledge of key markets combined with STR data indicated the markets that experienced the highest decline in terms of occupancy, ADR, and rooms sold.

According to the hospitality research undertaken, Windhoek was the weakest performer in terms of occupancy with a 13% decline when compared to 2017. The economic challenges facing Namibia continue to affect the hospitality market. Despite the weaker occupancy performance, ADR for the city grew by 7,4%.

The hospitality research in Cape Town indicated that occupancy declined by 10,6% for the first six months of 2018. The reduced occupancy relates to an increase of 1 000+ rooms towards the end of 2017, the Cape Town water crisis, and the political and economic challenges which affect domestic business and leisure travel. According to the hospitality research undertaken, ADR for the city has also come under pressure given the current operating environment.

The hospitality research in Pretoria showed that an increase of 3,3% in supply in the first six months of 2018 resulted in a 6,4% decrease in occupancy. Commensurate with Cape Town, the economic and political pressures facing the country have also affected the occupancy levels in Pretoria. Unlike Cape Town, hospitality research shows an increase in ADR of 4,4%, albeit below inflationary levels. The Protea Hotel in Loftus Park has recently opened adjacent to Loftus Versfeld Stadium with 152 rooms, and is likely to continue to place pressure on the market.

Following similar trends to Cape Town and Pretoria, hospitality research shows that Durban also experienced a decline in occupancy of 3,5%, whilst the ADR increased by above inflationary levels. Although no new supply is planned in the Durban node, the hospitality research indicated that new international brands, including Hilton Garden Inn and Radisson Blu will enter the Umhlanga node. This is, however, unlikely to affect the demand for the Durban area.

Lusaka occupancy levels declined by 1,1% despite hospitality research showing a decline in rooms available in the city. The InterContinental closed one of their wings for renovations, yet the market demand remained below that experience in previous years. ADR also declined by 1,9%.

Although currently showing negative trends, the hospitality research shows that some of these cities are likely to rebound in the short term. Cape Town is a case in point. The markets are expected to show recovery towards the end of 2018, with a full recovery anticipated after the 2019 elections.