The latest hotel sector revenue stats suggest that income has returned to pre-pandemic levels however, when adjusted for general price inflation, this is not the case says John Loos, Property Strategist at FNB Commercial Property Finance and while the sector has faced a challenging environment, 2025 appears to be poised for improvement.
Data from Statistics SA showed that hotel sector revenue grew by 9.5% year-on-year in November 2024, up from 6.8% in October 2024, outpacing general inflation, which marks a significant recovery from early 2024 which saw year-on-year revenue decline by 3% in July 2024.
A key question remains though, says Loos. Has the hotel sector fully recovered from the 2020 / 2021 lockdowns?
At face value, Statistics SA’s November 2024 total hotel income data suggests that the hotel sector has recovered with revenues estimated to be 3.65% higher than in November 2019. However, when adjusted for inflation using CPI for hotels and restaurants, hotel income in November 2024 was still 17.74% below November 2019 levels.
Analysis of occupancy rates supports this with the national hotel occupancy rate in November 2024 46.9% – significantly below the 54.7% recorded in November 2019. This decline stems from a 14.25% drop in stay nights sold compared to five years ago.
Loos says that spending patterns have evolved with the average income per stay night sold in November 2024 26.9% – higher than in November 2019. Adjusted for inflation, this figure was only 0.7% higher than five years ago which suggests that while fewer people are staying in hotels, those who do, spend roughly the same in real terms as they did before the pandemic.
“2025 is anticipated to be a stronger year for the hotel sector with declining interest rates and improving economic conditions which should support higher tourism and accommodation demand”, says Loos.
“The 9.5% year-on-year revenue growth in November 2024, which significantly outpaced the 3% CPI inflation rate, reinforces expectations of a stronger revenue performance.”