South African Hospitality Industry Already Seeing Positive Spin-Offs From 2010 Soccer World Cup

GHIC managing director Joop Demes says this is to a large degree as a direct result of South Africa winning the 2010 World Cup bid, as to have a presence in South Africa has become a must for every global hotel operator. 'The build-up and exposure that South Africa will receive pre- and post-event will result in aggressive growth in foreign tourism - a proven fact in every country where this event is held. The value for money proposition, the absolute beauty of this country, the cultural diversity of its people and its first world infrastructure will also sustain this growth in many years to follow,' he says.

Since 2000 - and excluding the above transactions being concluded - the company has facilitated transactions in the industry of over 150 million euros - two thirds of which has been generated through international investors, and predominantly financed through private as opposed to corporate capital.

'An interesting trend which has recently emerged in the industry is towards private investments being undertaken in tandem with relocation either from overseas or inter-regionally. In response to this demand we recently formed a new national division specialising in guesthouses and small hotels, which in just six months has concluded five transactions at a total investment of approximately 6.5 million euros. Three of these transactions were to European investors relocating to South Africa,' says Demes.

He says the most growth experienced in the hotel industry is currently in the three star hotel sector. 'While the stable and strong rand has been positive for investment, it has created a shift from five to four, and four to three star hotels - in terms of value for money for hotel guests. We are also starting to see strong demand from private and corporate investors for what the Americans refer to as condominium hotels. What this effectively means is a residential component - in various forms - within a fully serviced hospitality environment, and whereby the development profit realised through the sale of real estate, is utilised to finance a traditional hotel component.

'As a result of this demand we have formed a strategic alliance with the USA based Cendant organisation - the largest travel and real estate services company in the world -who in August (2005) will be launching Registry Collection in Africa. This is an international vacation exchange company specialising in services related to private residences across the globe. At the same event we will also be launching a new company to assist developers in the assembly, sales and marketing of private residence applications within a hospitality environment. At this stage we are dealing with projects in South Africa, Mozambique, Mauritius and the Seychelles,' adds Demes.

Since 2001, the hospitality industry in South Africa has experienced phenomenal growth. Demes says this has been driven by both corporate and leisure demand on the national domestic front - mainly due to a strong and growing economy, coupled with increasing corporate and leisure demand regionally, and strong international demand from a leisure and corporate incentive perspective.

Commenting further on the industry, Demes says while the government is exposing South Africa at a much better level through various tourism bodies, the overall budget for international exposure falls short of many competing destinations. 'Government is also assisting by way of attractive grants to stimulate expansion and new developments. However, I believe it should go one step further and consider attractive fiscal arrangements to further stimulate investment in this sector, such as for example, further accelerated wear and tear allowances together with rebates on staff training and/or employment.

'There are opportunities for increased investment throughout the industry, because this is driven through a growing local corporate and leisure market, as well as an increasing international market. The more conservative investor will look at gateway cities such as Cape Town and Johannesburg, and proven destinations such as the Winelands, Garden Route and Kruger Park. However it will just be a matter of time before we see new projects in areas such as the West Coast - which is reminiscent of the Algarve some 35 years ago - and certain parts of the Eastern Cape, and KwaZulu-Natal,' adds Demes.

'In the next decade we can expect to see tremendous growth in the hospitality sector, not only through a strong and growing local economy, but also through still relatively untapped international tourism demand,' concludes Demes.

For further information contact Joop Demes of GHIC on 082 883 2231.

Reader Comments:

Be the first to leave a comment for this article