South African Hotel Performance Strong

14th May 2003

The growing importance of the tourism sector to the South African economy was perfectly illustrated by the presence of President Thabo Mbeki at the opening ceremony of the 2003 Indaba Travel Fair held in Durban from 3-6 May 2003. The fact that his speech touched on some of the key industry issues, such as the importance of tourists feeling secure, arguably demonstrated a higher level of understanding by the Government than had necessarily been evident in the past. His comments were certainly warmly received.

Given the rapid changes happening in the South African economy, there are concerns over the sustainability of the unprecedented growth in 2002 achieved by the South African tourism market. The combination of a downturn in the world economy, the war in Iraq, a rapidly strengthening Rand and fears about the SARS virus all appeared to be conspiring to blunt the achievements of 2002 in the lead up to Indaba 2003

The release this week of the 2003 first quarter results of the HotelBenchmark Survey by Deloitte & Touche for South Africa strongly suggests that the positive trend of 2002 has in fact continued. Of the 24 markets tracked across South Africa, all bar one, experienced double-digit revPAR increases compared to the first quarter of 2002. Whilst occupancies maintained the high levels achieved in 2002, average room rates increased on average by 19 percent across the country and revPAR (revenue per available room) increased by 22 percent. This is fantastic news for the wide spread of Indaba participants, who benefit both directly or indirectly from the influx of tourists to the local hotels.

Although the HotelBenchmark Survey has been tracking the performance of the South African hotel market since 1999, this is the first quarter that occupancy, average room rates and revPAR information has been available in the survey on a grade basis for three, four and five-star hotels in Cape Town and Johannesburg. The results of this detailed information make exciting reading and highlight that
á Occupancy levels remained high across all grades of hotels.
á Average room rates have increased by between 13 and 25 percent during the first quarter of 2003.
á Four and five-star hotels in Johannesburg achieved revPAR growth in excess of 27 percent when compared to the same period in 2002. Hotels in Cape Town also reported a similar trend.

Whilst it is important to recognize that the cricket world cup held in February 2003 played a role in the above results, it is more than evident that demand for hotel accommodation at all levels has remained strong during the key first quarter. Indaba operators will be seeking innovative ways to keep this momentum going - the co-sponsorship this month by Southern Sun of the Indian International Film Academy “Bollywood” awards in South Africa is a perfect example of the ways in which this will need to be done.


Commenting on the results Rob O’Hanlon, a partner in Deloitte & Touche’s travel, tourism and leisure practice said “The South African Rand appears to be defying gravity with its 40 percent gain against the US dollar last year and a further 19 percent rise in the first four months of 2003. As it approaches R7 to the dollar - a level not thought achievable since the dramatic devaluation in late 2001 - hoteliers in South Africa can only wonder at the potential negative impact it may have on tourism numbers for the remainder of 2003. Only time will tell if South African operators have been able to conclude arrangements with their clients that satisfy local needs to meet the demands of a rising currency and overseas demands for a destination that not only offers a fantastic variety of tourism activities but does so at a world beating price. If they can do so, surely it is a signal that the local tourism industry has the potential for the future that more than justifies the significant investment that continues to take place by major tour company operators and hotel owners.”

The HotelBenchmark Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,000 hotels. The HotelBenchmark Survey - South Africa collects occupancy and average room rate data from over 200 hotels representing nearly 27,000 rooms every month, making it largest independently run hotel performance survey in the region. For further information or details on how to join the survey please visit us

or contact Lorna Clarke on +44 20 7007 1563.

Deloitte Touche Tohmatsu is one of the world’s leading professional services organizations. The member firms of Deloitte Touche Tohmatsu deliver world-class assurance and advisory, tax, and consulting services. With more than 119,000 people in over 140 countries, the member firms serve over one-half of the world’s largest companies, as well as large national enterprises, public institutions, and successful, fast-growing global growth companies. Our internationally experienced professionals strive to deliver seamless, consistent services wherever our clients operate. Our mission is to help our clients and our people excel.
Deloitte Touche Tohmatsu is a Swiss Verein, and each of its national practices is a separate and independent legal entity.
The dedicated Travel, Tourism, and Leisure practice serves owners, investors, operators and developers throughout the world.
Authorised by the Financial Services Authority in respect of regulated activities. The information contained in this article is correct at the time of going to press. For further information on Deloitte & Touche UK, you can access our website on



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