Notice
 

HOTEL PRICE REVIEW

SA hotel prices expected to rise as industry recovers

23 March 2012
 

SA hotel prices expected to rise as industry recovers
Hotel prices around the globe are rising. This is according to the latest Hotels.com Hotel Price Index (HPI), which showed a 4% increase in the price of a hotel room in 2011.

The biannual HPI reflected a continuing trend of steady recovery after a 13% tumble in 2009.

"The hotel sector is a good barometer for the global economy as a whole. Prices are up because demand for rooms is on the rise - a sign of higher levels of business and consumer spending. Global conditions, influenced last year by political uprisings, natural disasters and currency fluctuations, do have a major impact on prices but, overall, the momentum is there and the market is growing," says David Roche, President of Hotels.com.

The report noted that the continuing strength in corporate travel in particular has helped to push up global demand and room rates. However, in spite of the increase, the global average price remains lower than it was in 2005.

As the local hospitality industry recovers from the recession and the windfall of the World Cup, industry experts anticipate that hotel prices will follow international trends and reflect a moderate increase in accordance with rising demand and stronger business confidence.

"I believe that Southern Africa will follow the global trend towards gradually higher rates. Occupancies have stabilised locally and are showing encouraging signs of improvement after a tough period in which a lot of discounting took place, particularly at the top end of the market," says Clifford Ross, CEO of City Lodge Hotels.

Ross maintains that as occupancies improve on the back of stronger business confidence and economic growth, there will be an opportunity for the hospitality industry to responsibly increase rates, which have been under pressure since the global economic meltdown in 2008.

Danny Bryer, Director of Sales, Marketing and Revenue for the Protea Hospitality Group, agrees: "In the past six months we've seen a slow but consistent turnaround in dismal occupancy rates that declined immediately after the Fifa World Cup in 2010. During this slump, massive discounting occurred across all star gradings, but particularly in the five-star market."

Bryer asserts that while the turnaround in occupancies started in September last year, it's taken several months for rates to start catching up and reflect the increasing demand for occupancy. "For the remainder of 2012 we need to balance the market to limit further damage to the industry and the demand for rooms is allowing us to do that," he said.

The Hotels.com HPI is based on bookings made on Hotels.com sites around the world and tracks the real prices paid per hotel room per night (rather than advertised rates) for approximately 142 000 properties in more than 19 800 locations in over 85 countries.