Tag Archives: occupancy

Hotels forecast downturn in performance

Hotel representatives in South Africa are less optimistic about their occupancy and financial performance in the second quarter of 2009 than they were twelve months ago, according to a survey done by Horwath HTL Hotel Performance Confidence Indicator, reports TravelHub.

A decline in occupancy is expected by 56 % of hoteliers, while 44 % expect a decrease in revenue.     However, 52 % indicated that they expected Average Room Rates to increase.  

Occupancy declines are most likely to affect two star hotels (71 %), then 4-star hotels (60 %), 3-star hotels (57 %) and 50 % of 5-star hotels, says the survey.    Smaller boutique hotels are far more confident about occupancy levels than are large 250 + room hotels, which have the lowest level of occupancy confidence.  

In the Western Cape the occupancy forecast is particularly bleak, given the added problem of seasonality, resulting in between 59 – 70 % of all hotels in the region expecting their occupancy to decrease.   Also, between 50 – 63 % of all hotels in the province expect decreases in revenue, particularly so at 4- and 5-star level. 

Overall, the lower star rated hotels appear to be more confident about raising their Average Room Rates compared to the 5-star hotels, who have the lowest expectation of all star grading categories in doing so.    Revenue declines are most likely to take place at 2-, 3- and 4-star hotels, with 40 % of 5-star hotels being confident that their revenue will not change from last year.

Credit crunch hits hotels

The global credit crunch will hurt hotels across the globe, with hospitality consulting group Horwath HTL predicting an average decline in occupancy and room rates by 5 %, resulting in a 10 % decline in revenue per available room (RevPAR).

An international survey conducted by Horwath HTL has shown that South American hoteliers are least pessimistic about the effect of the credit crunch on their performance.   However, hotels in the USA, Canada, and in Asia specifically, are most pessimistic about their performance for 2009.

What credit crunch?

Bookings ahead for the accommodation industry look very promising, as the world appears to have gotten used to the credit crunch, and is rewarding itself with holidays as a result of what it has endured this year.

February is always a heavily booked month, and Whale Cottage Camps Bay is already 75 % booked ahead, a very different picture to that experienced for November, when only half the accommodation was booked prior to the start of the month and the rest was booked last minute during the month. 

It would appear that the remainder of the summer season will be a booming one.   Bookings from the UK market are as strong as in seasons before, and the 2 % cut in the UK VAT rate, and interest rate cuts, coupled with the favourable exchange rate, are stimulating confidence, and therefore tourism bookings.   The UK and Europe are also experiencing a very cold and early winter.

The petrol price decrease, and the anticipated cut in the interest rate this week, is encouraging South Africans to travel locally this festive season.  With the cost of a tank of petrol under R 400, bookings for the Garden Route and country towns and villages outside of Cape Town have seen a strong and very welcome increase.