The hospitality research into the Cape Town market highlighted that despite a challenging year for the city, the overall performance of the hotel sector was strong. The hospitality research undertaken by HTI Consulting showed that between mid- and end-2017, approximately 1 000 rooms entered the Cape Town market, including The Silo Hotel (28), the Radisson Blu Hotel & Residence (218), Radisson RED Hotel (252), SunSquare (204), and StayEasy (300). In December 2018, an additional 275 rooms entered the market (Signature Lux Hotel by ONOMO  and AC Hotel by Marriott ), resulting in a 13% increase in supply over an 18- to 24-month period. Most of this supply was in the 3- and 4-star markets, which accounted for 98% of the increase in supply.
The impact of the Cape Town water crisis, combined with the additional supply in the market and more depressed occupancy conditions, saw the occupancy levels in the Cape Town market in the first part of the year decline, according to hospitality research from STR Global statistics.
|Differential Between 2017 and 2019|
Source: STR Global
However, as the season commenced at the beginning of September 2018, the hospitality research shows that the position changed radically with occupancy levels showing a strong recovery when compared to the first part of the year:
Source: STR Global
STR Global’s hospitality research showed that by year-end, the Cape Town market ended with a 65% occupancy versus 69,5% in 2017 and a decline of only 0,7% in rooms sold. Considering the market conditions in 2018 (new supply, water crisis and the announcement of Day Zero, and challenging economic conditions) a greater decline in the market would have been expected. According to the hospitality research conducted by HTI Consulting, the 5-star market was affected the most by the water crisis, as travellers decided to rather visit other destinations out of a moral obligation not to add to the strain of the crisis. The 3- and 4-star markets were mostly affected by the addition of new supply.
The stronger performance of the market towards the end of the year indicates the resilience of the Cape Town market. Through additional hospitality research and interviews with hoteliers in Cape Town, it was determined that the market recovery for the December period was driven by short-lead bookings by corporate groups (incentives) and a recovery in the film industry. Considering the usually longer lead time for overseas tourist bookings, the demand from this market remained subdued. Most hoteliers indicated that forward bookings from overseas travellers for 2019 were looking more positive from May onwards, however, a full-market recovery is only anticipated at the start of the 2019/2020 season.
Given the circumstances in the Cape Town market in 2018, the performance of the market for the full year of 2018 was strong.