City Lodge benefits from tourism boom
Last year was a really good one for the global tourism industry, with international travel returning close to levels last seen just before the pandemic.
Inbound international travel to SA was no exception, with visitors enticed by outstanding scenery and a weak rand, which makes the country an exceptionally cheap destination for most foreigners.
Even Eskom’s load-shedding and the high crime rate didn’t deter foreign travellers. And there can be little doubt that the Springboks’ success in the Rugby World Cup in October lifted the country’s profile. This year looks set to build on that success and the turnaround at JSE-listed hotel chains such as City Lodge Hotel Group and Southern Sun should continue.
According to the UN World Tourism Organisation, international tourism grew by 22% year on year in the third quarter of 2023, reflecting a strong summer in the northern hemisphere. International arrivals reached 91% of prepandemic levels in the review period. For the nine months between January and the end of September they increased to 87% of pre-pandemic levels.
SA is benefiting from this greatly improved situation. According to Stats SA, internationals arrival rose by 51.8% to 7.6-million in the 11 months to end-November. Still, the euphoria must be tempered with the realisation that more than half of international arrivals are overland arrivals from the rest of Africa.
According to the UN organisation’s definition of a tourist, such arrivals are indeed genuine tourists. However, they cannot, by definition, be capable of spending in the same way as their well-heeled counterparts from Asia, America and Europe with their hard currencies.
The one exception to that is arrivals by air from the rest of Africa — wealthy African tourists who tend to fly into big cities such as Johannesburg over December and enjoy massively discounted accommodation in hotels that are often almost deserted at that time of year. However, the number of travellers in this category is relatively small.
Germany, the UK and the US remained the largest single source of inbound travellers from hard currency areas, with a combined total of almost 766,000 visitors in the 10 months to the end of October. That equates to about 46% of total foreign arrivals, excluding those from the rest of Africa.
CHINA AND INDIA
Aside from this dependable source, there was explosive growth in arrivals from East Asia, notably China, which only recently relaxed its Covid-19 protocols. Arrivals from there soared by 232% to 31,500 in the 10-month period, while Singaporean arrivals amounted to 5,740, a rise of almost 202%.
The largest single Asia component of inbound international tourists is from India, which grew by 48% to 66,000 last year.
While City Lodge’s main focus is undoubtedly the corporate traveller, it has also participated in the strong rebound in inbound international tourism. In a voluntary trading update in late November, it stated that both corporate and leisure travel have returned to normalised pre-Covid trading levels.
The group achieved a 62% average occupancy level for the three months ended September 30 2023, up from 54% for the corresponding period in 2022. And the group managed to get an average 9% increase in room rates compared with the previous period. That follows a 12% increase for financial 2023 as a whole.
City Lodge’s interim results are expected on February 23.
Tourism is a great value creator, especially for a developing country such as SA. More than 1-million are employed directly in the sector and that figure would be even greater when taking indirect employment into account. Also, it has proved to be an exceedingly resilient industry when judged by its ability to survive the pandemic. Its future looks very bright indeed.