Hotel Industry Analysis

Hotel Market Study
April 19, 2018
Operator Selection Africa
April 19, 2018

The Hotel Industry Analysis of the Winelands


The hotel industry analysis on the Cape Winelands, in particular the Franschhoek region, shows that the hotel market is predominately geared towards luxury boutique hotels, with approximately 75% of the supply being rated four and five stars. The hotel industry analysis also indicated that the Franschhoek region suffers from seasonal demand with notable declines in both occupancy and achieved rates during the low season or winter months.


The analysis showed that the bulk of available rooms/suites (approximately 50%) are provided by guesthouses and bed-and-breakfast establishments, with a small percentage being hotel rooms. Establishments within the Franschhoek hotel industry tend to be independently managed, with only a few branded establishments. In addition, the hotel industry analysis provided insight into the local brands that are present within the hotel industry, such as Protea Hotel by Marriott and Dream Hotels & Resorts’ Le Franschhoek.


Despite the significant growth in international tourism demand, the occupancy performance for the establishments in the Franschhoek hotel industry has been relatively stagnant over the last three years, which became apparent when conducting the hotel industry analysis in the region in 2017. Statistics recorded by local tourism bodies indicate an average of 60%-62% over the last three years. The statistics are, however, misleading when compared with the hotel industry interviews conducted during the analysis. Over the peak summer seasons, the establishments achieve extremely high occupancy levels, as seen in the Q1 2017 performance in which occupancy of 87% was achieved. The hotel industry analysis indicated that ADRs over this period are also considerably higher when compared to the year as a whole.


Seasonal demand for Franschhoek was highlighted during the hotel industry analysis, with a very high summer demand and low winter demand, therefore limiting the extent to which establishments can maximise their performance and occupancy levels of 60%-65% in this seasonal climate. The overall continued effort to curb seasonality in the market resulted in a stronger winter average occupancy of 40%, compared to the previous year where 37% was achieved during this period.


During the hotel industry analysis, the interviews with management staff pointed to a longer length of stay by foreign tourists. Another important trend which was highlighted during the analysis was the use of out—of-season events and festivals to drive demand to the Winelands during the quieter months, attracting both the domestic and international tourists.



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