Hotel occupancy spikes, but still limping compared to pre-pandemic

  • Tourism accommodation occupancy levels have shown large increases compared to last year this time.
  • This is, however, mainly due to the low comparison base due to strict lockdowns in May 2020 compared to May this year.
  • The largest year-on-year increases in income from accommodation were reported by caravan parks and camping sites, and guest-houses and guest-farms.

Occupancy rates in the hotel sector — which makes up the bulk of the country’s tourist accommodation sector — have remained depressed compared to pre-pandemic levels in 2019. But they have still spiked significantly year-on-year, the latest data from Stats SA show.

The largest year-on-year increases in income from accommodation were reported by caravan parks and camping sites, and guest houses and guest farms.

The spike is in part thanks to pent-up demand from households, says Investec economist Lara Hodes.

In May this year, hotel occupancy rates came in at just over 24%, compared to levels of just under 46% in May 2019.

The data also show large increases year-on-year in income from tourism accommodation in May this year compared to May 2020. Income from accommodation increased by 94.6% in the three months ended May 2021 compared with the three months ended May 2020.

This is because it comes from the very low base level due to the heavier lockdown in effect over that period last year, with severe restrictions on leisure travel.

Seasonally adjusted income from accommodation decreased by 2.6% month-on-month in May 2021. The largest negative month-on-month growth rates were recorded for caravan parks and camping sites (-6.5%); and hotels (-1.5%).

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"Pent-up demand by households with accumulated savings has helped buoy this sector. However, many consumers remain financially distressed and wary of travel [due to low] vaccination rates. Unemployment is at a historically elevated level and high administered prices continue to dilute disposable incomes," Hodes said in a statement.

"Reviving SA’s tourism sector is a key priority for government, owing to its potential to absorb many low skilled workers and its strong linkages with other sectors of the economy."

But, said Hodes, recent riots would have had an impact on revival efforts.

"The recent unrest in the country will have negatively affected SA’s brand. This during a time when it is more difficult to attract foreign travellers who are opting to rather travel closer to home and to countries with high vaccination rates."

She said political and economic stability, coupled with a hastened vaccination rollout, is imperative to boost confidence and attract visitors. She foresees that the adjusted lockdown level to curb the third Covid-19 wave, restrictions on travel to and from Gauteng and the alcohol ban will have a further negative impact on the already battered tourism sector in the near term.

A recent report published by the United Nations shows that "the greatest impact has fallen on developing countries". During 2020 the decline in tourist arrivals across developing nations was "mostly between 60% and 80%, according to the report, says Hodes.

Stats SA data shows that, measured in nominal terms (current prices), total income for the tourist accommodation industry increased by 2 027.7% in May 2021 compared with May 2020.

Source: News24