South Africa's hospitality sector faces mounting pressures despite rising tourism demand

A recently released report has illuminated critical issues plaguing South Africa's hospitality sector, suggesting that external pressures may hinder its long-term recovery, despite an uptick in tourism demand.

The inaugural HAMAC South African Hoteliers Report reveals distressing trends that demand immediate attention to ensure the industry's survival and growth trajectory.

According to the findings, 77% of hoteliers are struggling with recruitment and retention of skilled staff, which is identified as the most pressing issue facing the sector.

With 58% of respondents reporting stagnant or declining profitability over the past five years, the report casts a shadow over the perceived revival post-COVID.

As the industry battles to regain its footing, nearly 30% of hotel operators find themselves performing worse than they did five years ago.

Rising operational costs coupled with utility instability have compounded the challenges for hotel owners.

Labour costs have been a driving concern, identified by 37% of hoteliers, while electricity issues and inflated food costs follow closely behind at 34% and 29%, respectively.

Additionally, bureaucratic red tape has emerged as a significant operational constraint, impacting flexibility and responsiveness to market dynamics.

“The findings confirm what many hoteliers experience daily: recovery on paper is not the same as recovery in practice,” states Anton Gillis, CEO of HAMAC. “Without meaningful intervention, systemic pressures will continue to erode resilience and limit growth.”

The report also underscores the implications of these challenges on capital investment.

Alarmingly, over half of the respondents (54%) reported deferring essential upgrades and improvements due to funding limitations, freezing critical growth opportunities as an increasing number of hoteliers look to enhance competitiveness.

However, amidst these challenges, there are signs of hope.

Nearly half (46%) of respondents expressed a strong intent to invest in workforce development, highlighting a commitment to human capital growth, contingent on improving infrastructure reliability.

There is also a marked interest in technology, with 77% of hoteliers actively exploring innovation to streamline operations, although 76% admit to lacking an artificial intelligence strategy.

The findings reiterate a concerning trust deficit within the industry, with 70% of hoteliers indicating a lack of confidence in the support from SA Tourism and the Tourism Grading Council of South Africa (TGCSA). Meanwhile, sentiment towards FEDHASA appears divided, suggesting a critical need for advocacy and representation in tackling the industry's challenges.

In tackling these issues, the report calls for coordinated action from both government and industry stakeholders.

Enhanced infrastructure reliability, reduced regulatory burdens, and focused skills development support are identified as essential factors to safeguard the future of this key economic sector.

“Hospitality must be treated as strategic economic infrastructure,” Gillis stresses. “The sector is pivotal for job creation, regional development, and local economies. As such, the necessary support structures must be in place to ensure sustained competitiveness.”

The report concludes that while South Africa’s allure as a world-class tourist destination remains intact, the hospitality sector’s potential will only be realised through collaborative efforts focused on skills development, infrastructure reform, targeted investment, and sector-wide planning.

BUSINESS REPORT