NO RESPITE FOR SA’S HEARTBREAK HOTELS
Hotels are still running on empty, but holiday-home lets are filling up for the festive season, giving property owners something to celebrate
Amarked recovery in hotel occupancies and revenues this festive season is looking increasingly unlikely as forward bookings remain paper thin.
Tony Romer-Lee, chair of industry association Satsa, says: “Forward bookings for the summer holidays are up an average 20%-30% on this time last year, but international pick-up is still very shy. The UK is not happening and Germany is just starting to open up for bookings, so fingers crossed we get some last-minute business.”
Romer-Lee says while there’s definitely pent-up demand from foreigners wanting to travel to SA, a recovery in international tourism will probably get under way only in 12 months, when the pandemic has been largely overcome and SA has been removed from high-risk travel lists.
According to the latest figures from global hospitality data and analytics group STR, SA hotel occupancies have slumped further this year: from a record low of 38.2% for the first seven months of last year to an even lower 29.1% for the same period this year. That’s down from 2019’s 59.4% average (see graph).
Hotel earnings, as measured by daily revenue per available room, have dropped to a measly R301.63. That’s nearly 40% down on last year’s average and less than half the R746.54 achieved in 2019.
Industry players are pinning their hopes on local travellers to fill hotel beds over the coming summer months. Hara Jackson, sales director at Legacy Hotels & Resorts, which manages a portfolio of more than 20 properties across SA and Sub-Saharan Africa, says bookings at the group’s Pilanesberg and Kruger Park bush lodges have picked up noticeably in recent weeks, with strong weekend demand and midweek corporate getaways gaining momentum.
But Cape Town bookings remain weak – specifically at the V&A Waterfront. That’s despite most hotel groups offering attractive incentives to lure guests back. For instance, Legacy’s daily rates are down an average 20% on 2019 levels. The company’s Portswood Hotel, at the waterfront, now offers rates of R1,200 a person sharing, breakfast included. Two years ago a night at the fourstar hotel would have set you back at least R1,800 a person — breakfast excluded.
Jackson remains hopeful that bookings will pick up as the festive season draws near and locals who normally would have gone abroad opt for a “staycation” instead.
But booking decisions are becoming increasingly “last minute”, she says. “This picture is the polar opposite to pre-Covid, when our Cape Town hotels and bush lodges were managing high occupancies from midDecember to January. Back then, most of our business was from international leisure tourists, who planned and booked at least 90-150 days in advance.”
Jackson adds that a fourth wave of Covid, another new variant of the coronavirus or a delay in the country’s vaccination programme could instantly put paid to any hopes of a sustained recovery.
In contrast to the hotel sector, short-term holiday-home lets seem to be recovering at a brisker pace. Rental agents in coastal hotspots across SA are reporting strong uptake of properties to let for December and January.
As Ross Levin, licensee for Seeff in Cape Town’s Atlantic seaboard, waterfront and city bowl, puts it: “Much of the country didn’t get to enjoy a true summer holiday last year, so there’s even more pent-up demand for this coming season.”
Levin believes there’s been a definite shift away from hotels to home stays, as the latter provide more “space, privacy and exclusivity”.
He says the work-from-home trend has also supported higher demand for shortterm rentals in Cape Town’s touristy areas on the Atlantic seaboard.
Cape Town rentals have nevertheless softened and are down by about 20% from pre-Covid levels.
“Where rates reached about R200,000 a night in the pre-pandemic peak period, those at high-end suburbs are now at R6,000R160,000 a night, depending on the suburb and the property,” says Levin.
Apartments are going for about R2,000
R25,000 a night, with mid-priced apartments in Sea Point and surrounds particularly sought after.
In the popular Eastern Cape holiday enclave of St Francis Bay, demand for festive season holiday rentals is “as strong as ever”, says Richard Arderne, Pam Golding Properties area principal.
He expects a bumper Christmas, as there are only a handful of rental homes still available for December and January. Rates have remained firm, with houses on the canals letting for up to R20,000 a night. Daily rentals typically start at R5,000, he says.
Demand for rental homes has been equally robust in Hermanus and surrounds in the Western Cape, including Overstrand areas such as Pringle Bay.
Cisca de Vries, short-let rental agent for Seeff Hermanus, says about 85% of her branch’s stock is already booked for the festive period. Rates for three-bedroom houses average about R2,500 a night, but can go up to R12,500 a night or more for luxury six- to eight-bedroom villas.
The most popular areas include Onrus (R1,250-R2,500 a night) and Voëlklip (R2,500R6,500 a night).
There’s also been strong uptake of holiday lets on the Garden Route. Gordon Shutte, Pam
Ross Levin
Golding Properties area principal in Knysna and Plettenberg Bay, says his stock is mostly fully booked for December and January.
However, it seems locals planning to go on holiday in KwaZulu-Natal (KZN) are delaying decisions. “There have been loads of inquiries, but booking confirmations are slow,” says Joleen Giraudeau, manager for Seeff south coast.
She believes there will be a flurry of bookings closer to December, when there’s more certainty about the possibility of a fourth wave and the lockdown restrictions that may come with that.
Andreas Wassenaar, licensee for Seeff Zimbali, shares the sentiment. He says the unpredictability of the pandemic means that last-minute bookings have become the norm.
He says that in Zimbali Coastal Resort & Estate, arguably KZN’s most prestigious golf and leisure resort, homes that rented for R5,000R10,000 a night in peak seasons prior to Covid are still available for December at R4,000-R8,000 a night.
A growing shift towards home stays among local travellers is confirmed by an independent study commissioned by peer-to-peer accommodation platform Airbnb.
The report, released by Genesis Analytics last week, shows that despite the virtual absence of international tourists and the imposition of local travel restrictions during the hard lockdowns, tourism spend generated through Airbnb contributed R8.12bn (directly, indirectly and through induced effects) to SA’s economy last year.
That’s down 26% on the R10.97bn generated in 2019, but roughly on a par with 2018’s R8.51bn (see graphic).
The total number of bookings in SA through the Airbnb platform fell by 39% last year.
Airbnb’s figures are impressive, considering that the overall volume of tourists in SA fell by 74.8% in 2020, according to Stats SA. Foreign arrivals dropped from 15.8-million in 2019 to a mere 5-million in 2020, of which the bulk visited SA in the first quarter of the year, before Covid hit SA’s shores.
Moreover, SA’s tourism sector lost a colossal R54.2bn last year.
Genesis Analytics partner Ryan Short, who led the Airbnb study, ascribes the resilience of the platform’s business, notwithstanding the devastating impact of the pandemic on global travel, to a sharp rise in domestic tourism.
If last year is left out of the equation, the number of South Africans who booked accommodation through Airbnb surged nearly 600% between 2016 and 2019 (from about 150,000 to close to 1-million), while the number of international Airbnb guests in SA rose by only 167% over the same time — from about 230,000 to 620,000.
In the 10 years since South Africans first began promoting accommodation on the Airbnb platform, the number of SA hosts has grown to about 50,000.
Short says the platform has unlocked new demand for domestic tourism, enabling more South Africans to compare accommodation options and tailor searches easily to meet specific needs and price points.
He adds: “Domestic tourism is likely to be a mainstay of the SA tourism industry in future.”
Though the Western Cape, KZN and Gauteng accounted for the bulk (about 90%) of Airbnb’s bookings last year, the Genesis study found that Airbnb has helped bring tourism to smaller, traditionally less popular provinces, as well as township markets. For example, guest bookings for North West grew by more than 130% annually from 2016-2020, compared with the Western Cape’s average 50% annual growth rate.
Trips to smaller towns and rural areas have also increased exponentially. Of the 10 fastest-growing towns in terms of Airbnb guest arrivals, seven are in rural areas. They include Limpopo’s Mokopane (Potgietersrus) and Polokwane, Thulamahashe (Bushbuckridge) in Mpumalanga, Middelburg and Queenstown in the Eastern Cape, Malmesbury in the Western Cape, Colesburg in the Northern Cape and Welkom in the Free State.
However, Cape Town still reigns supreme as SA’s most-visited Airbnb destination, followed by Joburg, Durban, Hermanus and Gqeberha (Port Elizabeth).
Much of the country didn’t get to enjoy a true summer holiday last year, so there’s even more pent-up demand for this coming season