South African Hotels surviving on Inbound Tourism as locals reduce trips under recession


Rising fuel prices, an economy in recession, record levels of unemployment, political uncertainty and the threat of further downgrades to the country’s credit rating, has pushed struggling South Africans to to the brink.

And unless you are leaving the country for good in search of greener pastures, as has been reported in recent months, the chances are you aren’t taking a short holiday to escape the country’s macro economic woes.

This is according to hotel chain, City Lodge, which reported that average occupancies at the group’s operations decreased by three percentage points to 63% in the year to 30 June 2017.

“In South Africa, the drop in occupancy was similar and was a direct result of the continued deterioration in business and consumer confidence, ongoing political uncertainty and negligible economic growth.

“Coastal hotels fared slightly better than inland hotels, benefiting from inbound tourism. Weekend occupancies were particularly soft,” the group said this week.

Despite the drop in occupancies, the group reported a marginal 1.8% rise in total revenue, to R1.52 billion, assisted by an inflationary increase in room rates.

Normalised headline profit before tax for the group decreased by 2.1% to R501 million, while normalised headline earnings decreased by 3.1% to R362.2 million. Normalised diluted headline earnings per share were down by 3.1% to 833.6 cents.

City Lodge said that occupancies have remained under pressure in the first six weeks of the new financial year. “It is hoped that a catalyst will soon emerge to improve sentiment and provide fresh economic growth impetus that will stimulate both business and leisure travel.


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