The emergence of the pandemic in South Africa led to double-digit declines for luxury hotels in 2020, followed by a further drop in sales in 2021. Interprovincial and international restrictions due to various lockdowns to stop the spread of the virus, and the emergence of different variants leading to new waves, heavily impacted the travel and tourism industry, which was limited to business travel.
When borders were closed and access to South Africa was restricted by the majority of the country’s major source markets in terms of inbound tourists, operators of luxury hotels opened their doors to locals to increase domestic consumption by offering discounted rates to attract their attention and maintain some level of cash flow. However, as international tourists started to slowly return to South Africa, it created concerns that these attractive incentives for local consumers would be removed as operators looked to recoup lost revenue by focusing on affluent clients.
Hotels have had to resort to cost-cutting measures such as enforcing pay cuts, and in the worst cases, redundancies, in order to reduce their operational costs. These measures had to be put in place in order to manage the negative impacts brought about by the pandemic, which continued to impact luxury hotels in 2021.
While restrictions around the world are starting to ease heading into the forecast period in line with the further rollout of vaccination programmes, expectations for a recovery for luxury hotels in South Africa are marginally optimistic. Recovery will be a slow process, with value sales predicted to grow slowly for the first half of the forecast period, as inbound tourism gradually returns.
While the number of luxury hotels in South Africa drastically declined in 2021, overall outlet numbers are predicted to make a full recovery over the course of the forecast period, with growth predicted from 2022. International names expected to make an early entrance include Radisson RED Rosebank located in Oxford Parks, which will be the second RED hotel in South Africa, and Canopy by Hilton, which is set to target a younger crowd in Cape Town.
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Understand the latest market trends and future growth opportunities for the Luxury Hotels industry in South Africa with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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Luxury: includes luxury and upper upscale hotels. Would generally include 5-star hotels and above, but may include some “4.5-Star” outlets, provided that the brands positioning warrants it. The luxury classification is primarily determined by the brand’s positioning and marketing, which will be at the high-end. Brand examples include Marriott, Hilton, Sofitel and InterContinental.See All of Our Definitions
This report originates from Passport, our Luxury Hotels research and analysis database.
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