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SA’s hotel property market forecast to recover

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FNB Commercial Property Sector Strategist, John Loos
FNB Commercial Property Sector Strategist, John Loos

by TINTSWALO BALOYI
JOHANNESBURG – SOUTH Africa’s hotel property market is expected to improve in 2022 but still lag behind the major commercial property classes.

These classes include vacant land and industrial property.

First National Bank (FNB) Commercial noted while much economic activity had normalized as lockdown regulations had been eased, some major challenges faced the battling hotel property class.

John Loos, Property Sector Strategist at FNB Commercial, said a large portion of demand for hotel rooms is non-essential in nature, and with many businesses and households financially pressured in the aftermath of the major 2020 recession, many would continue to put travel and hotel stays on the backburner.

Secondly, he said given the successful “zoomification” of much business interaction during the lockdown period, a portion of business travel that used to take place prior to COVID-19 is likely not to return.

Loos said South Africa had also been plagued by limitations on foreign travellers to the country.

Vaccine rollout, he said, is key in improving this situation, but the Sub-Saharan African region is behind with the rollout exercise.

However, the above challenges are expected to be in part alleviated in 2022, enabling an improved hotel property market year, but insufficient to end this class’ underperforming of the “big 3” commercial property classes.

By October 2021, average hotel occupancy rate had risen to only 31,6 percent from 18,8 percent in October 2020.

This was still far below the 52,8 percent of October 2019, while total hotel income for October 2021 was still 32,9 percent down on October 2019.

– CAJ News