Tourism recovery fuelling high demand for hospitality properties

With the tourism sector back in recovery after the challenges of the pandemic-years, there is growing interest in tourism and hospitality products from investors, according to Peter Rowell, a hotel broking specialist with the Seeff Property Group.

He says significant successes have been reported this year, all of which speak to the confidence returning to investing in the sector. Key performance indicators such as occupancy rates, average daily rates (ADR), and revenue per available room (RevPAR) are all showing upward trends.

Recent data (May 2025) indicate that the national hotel occupancy rate stands at 59.5% while the average RevPAR is up by 16.0% YoY. The figures for the Cape, currently the country’s hottest market for tourism products, looks even better, say Rowell. An April report puts the average occupancy at 72.5% and the RevPAR increase at 20.1% YoY.

There is also strong growth within the Sub-Saharan African hospitality sector. Johan Cronjé, regional vice president for Sub-Saharan Africa, Marriott International, recently commented that the energy in the hospitality industry in the region is incredible, supported by more people travelling for business and leisure.

High-end resorts and hotels are booming, says Rowell further. Southern Sun reported a rise in earnings in May, especially in the Cape, but also in Gauteng. Several big international hospitality brands are expanding in South Africa including Radisson, IHG Hotels & Resorts, and Protea Hotels by Marriott. Additionally, the new Club Med north of Durban under construction, the first of its kind on the African continent, is a further confidence boost for the sector.

The upside to investing in the South African tourism sector is that it is one of the most popular destinations in Sub-Saharan Africa. The Cape in particular is seen as a highly desired international destination, regularly named the best City in the World for various reasons, also voted best destination by Conde Nast Traveler, Telegraph Travel Awards.

The opportunity for investors is broad, and Rowell says these can range from big brands to boutique hotels, five-star guest and safari lodges, wine estates and more. Both local and international investors are increasingly drawn to the sector. The last decade has seen a notable uptick in international investors from amongst others Britain, France, Germany, and more recently, the Middle East.

The improved profitability and growth fuels confidence and the opportunity for diversification in investment portfolios, says Rowell further. Hotels and hospitality products are often marketed off-book, or investors approach us if they want to target a particular brand or establishment.

Notably, hotels are complex assets that require a specialised approach to valuation and sales, having regard to factors such as financial performance, location, property quality, and management.

When handling off-market hotel transactions, Rowell says the importance of trust, discretion, and confidentiality cannot be overstated. These elements are paramount since off-market deals involve properties not publicly advertised, often for strategic reasons or to maintain business continuity and avoid unsettling staff, guests, or competitors.

Without absolute trust, discretion, and strict confidentiality, sensitive information shared could leak which he says could lead to speculation, reputational issues, and could disrupt operations, and potentially cause the deal to collapse entirely.

Issued by Gina Meintjes