Hotel revenue and occupancy rates battle pre-pandemic figures

Preliminary monthly tourism statistics show the hotel sector to be recovering slowly, according to a November 2021 release by StatsSA.

On a year-on-year growth rate basis, total hotel sector income was a strong 95.4%, albeit off a low base compared with 2020 levels. Interestingly, though, hotel income outpaced the growth in income in both the ‘Guest House and Guest Farm’ category as well as ‘Camp Sites and Caravan Parks’, with the former category under longer term pressure while the latter category had already recovered far earlier during the post-lockdown phase.

When viewing total revenue value and comparing it to similar months in 2019 (pre-Covid-19), FNB reveals that the hotel sector’s income is still battling to recover with total hotel industry income in November 2021 sitting at -37.7% – below income figures for November 2019. When viewing occupancy rates in November 2021, the national occupancy rate was 33.2% – well below the 56.4% rate for November 2019.

However, it isn’t only a lower occupancy rate that limits hotel income; it is a more constrained client financial environment too, with average hotel income per stay in November 2021 -16.7% on November 2019’s level.

These November hotel income numbers continue to highlight a hotel sector that is far from being fully recovered i.e., 2019 levels, despite having made significant progress out of 2020’s hard lockdown with a few factors continuing to constrain the industry.

Domestic holiday tourists are more financially pressured. With holiday tourism considered non-essential in nature, this expenditure category is put on the backburner for numerous households.

Business travel has similar financial constraints and not seen as a ‘priority’. In addition, the business sector has successfully ‘Zoomified’ its operations. One great success of the lockdown has been in forcing late adopters to move onto more time and cost-effective communication platforms. That being said, physical business travel may never fully return.

There have also been severe restrictions on foreign tourism.

While FNB expects hotel occupancy and income improvements to continue in 2022 on the assumption that foreign tourism will open as vaccine rollouts progress across the world and in South Africa, we may not see 2019 levels of hotel revenue returning just yet, especially not in inflation-adjusted terms.

Weak revenue figures may suggest that the hotel property market will still underperform the three major commercial property sectors in 2022.