The extent of the post-pandemic rebound in the hospitality sector is nowhere more visible than at Cape Town’s V&A Waterfront, South Africa’s most-visited tourist hub.
Occupancies at the shop, work, stay and play precinct’s 12 hotels soared above 70% in the first eight months of the year, up from 52% in the same period last year and ahead of 2019’s 68%. Average daily rates at the V&A have surged 42% year on year.
Estienne de Klerk, CEO of Growthpoint in South Africa, which co-owns the V&A, says the “exceptional” recovery at the precinct’s upmarket hotels has been particularly noticeable since November.
Local and foreign tourists have returned in droves, with overall visitor numbers to the V&A back at historical levels, clocking in at nearly 24-million for the year to June.
De Klerk says the tourism rebound is further underscored by a 39% uplift in turnover at the V&A’s more than 500 shops and restaurants.
In December alone, sales at the precinct exceeded R1bn for the first time, about 30% ahead pre-Covid levels (in December 2019). As De Klerk puts it: “The statistics at the V&A are absolutely mouth-watering.”
The latest data from global analytics group CoStar confirms that Cape Town is leading South Africa’s hospitality rebound. Hotel occupancy levels in the city reached 64.2% this year (January-September), up from 50.2% last year and just ahead of the 63.1% recorded in 2019.
In contrast, occupancies in both Durban and Joburg are still noticeably behind 2019 levels (see graph).
Still, CoStar data shows that room rates are already ahead of 2019 levels in all three cities, with Cape Town’s recovery most noticeable. The Mother City recorded an average daily rate of R2,076 between January and September, nearly 25% up year on year and about double Joburg’s R1,113 and Durban’s R983.
The statistics at the V&A are absolutely mouth-watering
— Estienne de Klerk
It seems Cape Town’s revival has been supported in no small part by the rise of “bleisure” travel — trips that blend business and leisure. It’s a key trend to emerge in the wake of the pandemic, according to a report by the World Travel & Tourism Council (WTTC), in partnership with online portal Trip.com and auditor Deloitte, and is central to the global tourism rebound.
The uptick in bleisure travel is particularly noticeable in destinations such as Cape Town that offer easy access to recreational activities and tourist attractions that people can visit when they’re not working.
The rise of this hybrid form of travel has been driven, in part, by the turn to flexible and remote working during Covid lockdowns. Companies have also contributed, as they offer employees business trips abroad as incentives. They’re also allowing staff to combine leisure and business trips as a perk to ensure “higher employee satisfaction and greater workforce retention”, according to the report. And more and more business travellers are tacking a holiday on to the end of a conference.
Then there’s the rise of “digital nomads” — those who earn a living working online in locations of their choosing rather than from a fixed address. Several governments across the world are introducing specialist visas to allow digital nomads to work remotely in their countries for an extended period, usually tax-free. Barbados in the Caribbean and Spain are two examples.
According to the WTTC report, the rise of the hybrid or blended traveller has already contributed to people taking longer trips. The average round trip booked on Trip.com in 2019 lasted just nine days; in 2022 it was almost two weeks.
And it’s unlikely things will change soon. As the report notes, the practice should continue to support the global tourism rebound. In fact, global spending by travellers combining business with leisure is forecast to more than double from $150bn in 2021 to $360bn by 2027 .
Meanwhile, it seems local hoteliers and property investors are gearing up to attract a slice of this increasingly lucrative travel segment.
Industry players at the annual Africa Property Investment Summit held last week at Melrose Arch, Joburg, agreed that the next development wave is likely to shift to lifestyle and leisure resorts that cater for the new breed of blended traveller.
Developers are not only providing more recreational add-ons — such as restaurants, pools, spas, pubs and clubs — but also self-catering and work-friendly amenities, such as kitchens and desks in rooms, co-working spaces and meeting rooms in communal areas, and, of course, strong, reliable, free Wi-Fi.
KwaZulu-Natal based developer Collins Residential recently announced it is partnering with global brand Club Med to bring the brand to South Africa. And other hospitality groups including Accor, Radisson and Sun International are following suit.
Geri Flanagan, development manager for the Accor hotel group, says the shift in travel habits has prompted the group to expand its resort-style offering in Sub-Saharan Africa, including rebranding two existing hotels in Cape Town: Pullman and the Cape Grace at the V&A Waterfront. The latter is being turned into a Fairmont resort-style offering.
The Radisson Hotel Group is also shifting focus to the leisure market. Daniel Trappler, the group’s senior development director in Sub-Saharan Africa, says Radisson wants to double its South African footprint of 14 hotels within the next five years.
Two new hotels are already under construction — a 238-room resort-style development in Hoedspruit near Kruger National Park, and a 150-room hotel in Middelburg, which serves a large mining community.
Trappler says the Hoedspruit hotel, scheduled to open early next year, will have an expansive recreational component including a health spa, two swimming pools, fully equipped gym, kids’ club and equestrian centre. Outdoor activities include game drives, hot-air ballooning, horseback rides, abseiling and tubing.
The group is targeting other secondary cities such as Mbombela, Potchefstroom and Bloemfontein, which Trappler says are undersupplied in terms of branded hotel offerings.
Sun International is also pouring big money into expanding its leisure accommodation. Last week, the group unveiled a new R295m timeshare development at Sun City. The upscale Lefika Villas comprises 10 free-standing four-bedroom units, all en suite, and 48 three-bedroom units. It is, says Sun City general manager Brett Hoppé, the first five-star-plus timeshare on offer at the resort.
The Lefika project is 85% complete and already fully booked for Christmas and New Year. It forms part of the first phase of a larger redevelopment at Sun City that will include a clubhouse, new restaurants and other leisure amenities.
Other hospitality players, including developer Beekman Group, are introducing a sectional-title ownership model at holiday resorts to make it easier for people to spend longer periods away from home.
Buyers can purchase a hotel suite or self-catering unit at four Beekman developments, including Cayley Mountain Resort in the Drakensberg, The Kingdom Resort in Pilanesberg near Sun City, Menlyn Mix in Pretoria and San Martinho Beach Club in Mozambique.
Prices vary from R1.34m to R3.24m. Buyers can rent their units out full-time to holidaymakers and earn a projected annual income yield of up to 12%, or use the unit themselves for up to 14 weeks a year.
The lucrative ‘bleisure’ market is expected to reach $360bn globally by 2027
— What it means:
Beekman Group director Wayne Beekman says remote working has opened the opportunity for leisure property developers to create new extended-stay products in the hospitality market.
He says an investment in a sectional-title unit in a leisure resort allows people to take longer breaks while also getting some work done — without the hassle of worrying about management and maintenance.
The added incentive, of course, is that investors can earn a decent return when they’re not using their units themselves.
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