The hospitality research undertaken in Durban and Umhlanga indicates the decentralisation of the Durban CBD. The movement of corporate head offices to Umhlanga has had an impact on the demand and overall performance of the hotel markets within each node.
The hospitality research in Umhlanga showed that occupancy figures within the node have been on a positive trajectory since 2010, despite the high level of new supply that entered the market just prior to the FIFA World Cup. The hospitality research also showed that the decentralisation of the corporate market to Umhlanga and the increased tourism demand for this node have positively affected the hospitality sector. In 2017, however, hospitality research showed a decline in occupancy. New supply has entered the market, which has driven occupancy trends downwards.
According to hospitality research in Durban, the occupancy of the hospitality sector declined because businesses moved from the Durban CBD. Occupancy declined despite no new supply entering the hospitality market. However, a more positive environment is evident, as Durban has repositioned itself as a conference hub, a government hub, and a destination for domestic leisure tourists.
Hospitality research shows that this strategy has resulted in occupancy growth, and STR reports that the figures have remained above 65% in recent years. Research shows that more positive conditions in Durban are attracting additional hospitality investments. ONOMO Hotel Group recently opened their 160-room hotel in the Durban CBD in March 2018. This is likely to have a negative impact on occupancy, particularly for more dated hospitality products operating in the Durban CBD.
Hospitality research shows that Umhlanga hospitality products achieve rates higher than those achieved by the Durban market. On average, Umhlanga hotels are achieving rates 25% higher than those achieved in Durban. Additional hospitality research shows that Umhlanga hotels are at an advantage because of their proximity to a wider and higher spending corporate base. Umhlanga is also a destination preferred by higher spending leisure markets who are prepared to pay more for better quality hotel accommodation. Proximity to the King Shaka International Airport also provides benefits for Umhlanga for corporate and leisure guests, as well as conferences.