Cape Town saw a small dip in occupancy to 66%, but ADR (in US$) remained steady, despite the weakening of the Rand against the US$. In local currency there was a 30% growth in ADR. This represents four consecutive years of strong performance, proving the oversupply is fully absorbed. This is further illustrated by Tsogo Sun Group starting construction on a 500-room hotel complex comprising three brands in Cape Town. There is a planned development at the Capetonian Hotel in Heerengracht; and the Gorgeous George Hotel and Bar development being constructed in St Georges Mall. All these hotels are located in the central business district.
Also benefitting from the currency exchange rate, the Cape Town hotel market will keep performing well in 2016. The REVPAR will increase by 6.7% thanks to a peak in occupancy and a strong rate growth. Values will reach their highest level at US$167,000. Victim of its own success, Cape Town will need to deal with an increasing amount of supply coming into the market in the next few years which might affect hotels' performance and value until this oversupply is absorbed.