South Africa hotel market suffers from oversupply

21st September 2011 (Last Updated September 21st, 2011 18:30)

The hotel guestroom supply in South Africa increased by 5.7% every year from the end of 2008 to the end of 2010 on a compound annual growth rate basis in anticipation of the FIFA World Cup, according to data from STR Global.

The hotel guestroom supply in South Africa increased by 5.7% every year from the end of 2008 to the end of 2010 on a CAGR basis in anticipation of the FIFA World Cup, according to data from STR Global.

By June 2010, the supply level overwhelmed demand with over 68,000 rooms.

The pipeline report for July 2011 records almost 1,000 new rooms under development in South Africa.

With the exception of Durban and Nelspruit, which hosted fewer games at the end of the tournament compared with other markets, results for the seven months to July 2011 declined in year-on-year performance across all three key indicators in all markets.