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Monday Sep 07, 2015

SA hotels cheaper than African rivals

Despite average hotel rates in Cape Town rising above inflation over the past year, the country's tourist accommodation fares compare well with rates in other African cities.

Hotel rates in Cape Town averaged about $122 (R1 662) a room per night and had risen by 11 percent in the past year, a new survey of the industry by hospitality research company STR Global showed this week.

This compares well with African cities such as Addis Ababa in Ethiopia and Harare in Zimbabwe, where South African tourists have been hit by a new 15 percent value-added tax on the hospitality industry.

The survey says Addis Ababa has the most expensive hotels in Africa, at $231 per night.

In fact, Johannesburg has a lower average hotel rate - at $72 a night - when compared with rates in peer African cities such as $215.75 for a room in Lagos (Nigeria), $144.76 a night in Nairobi (Kenya) and $105.73 for a room in Casablanca (Morocco).

South Africa - currently second to Nigeria - is battling to reclaim its status as Africa's number one economy.

STR Global noted that hotel rates in Nairobi were almost double those of the rates charged in Johannesburg, while hotel rooms in Addis Ababa were 60 percent more expensive than those in Kenya.

"A great deal of the reason for the difference in rates across major African cities is simply supply and demand," said Thomas Emanuel, the director for business development at STR Global.

The survey report said hotel rates in Johannesburg had risen by as much as 14.9 percent in the year to the end of June while those in Nigeria had increased 5.8 percent.

Average cost of a night in a Cape Town hotel room

Hotel rates in Casablanca had actually declined by 4 percent while Cape Town rates had gone up by 11 percent.

"Cape Town's improvement is due predominantly to increased demand and no recent increases in supply since the 2010 World Cup," the STR Global report said.

"The rate decline in Casablanca is due in part to economic weakness in France, its major source market and in part to currency fluctuations," STR Global said.

Another official said "the wide disparity in room rates with exceptional prices being achieved in places where there is a shortage of supply, make it clear that there are parts of Africa that offer very attractive prospects" for hotel investors.

In Zimbabwe, hotel rates are set to go up by 15 percent after the government put in place a 15 percent tax on the hospitality industry.

However, some hotel operators are not immediately passing this extra cost on to visitors, a situation that could affect their profitability prospects.

Meikles chairman John Moxon said: "The introduction of value-added tax has effectively made Zimbabwe an expensive destination, and the South African source market, given the depreciating rand, was significantly affected. This has impacted negatively on occupancy growth in the last quarter of the financial year."

Meikles, which also has a retail partnership with SA's Pick n Pay, operates city and resort hotels in Zimbabwe.

The company is upgrading its hotels to help them better stand competition from rival operators.

Moxon described the company's trade in the hoteling division during the year to March 31 this year as "satisfactory" after it raised revenues by 5 percent to $16.4 million.

"This increase was assisted by a 13 percent rise in food revenue at Meikles Hotel and a 15 percent growth in revenue per available room at the Victoria Falls Hotel," the tourism company said.

"Earnings before interest, taxes, depreciation, and amortisation for the year was $1.9m, reflecting a 46 percent increase on the previous financial year and is testimony to the resilience of group operations," the company said.

The Sunday Independent


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