Despite uncertainty in the domestic tourism industry, owing to the revised visa regulations and a weak global economy, South Africa can still expect healthy growth over the next five years, PwC’s Hotels Outlook 2016 – 2020 reveals.

Almost 2 600 rooms will be added to the South African hotel industry over the next five years, with about 63 700 rooms expected to be available by 2020.

Fifty-four per cent of this capacity will be in Cape Town, with the construction of hotels such as Tsogo Sun’s R680-million two-hotel complex and Radisson Red’s R380-million V&A Waterfront complex, both due for completion in 2017.

Further, hotel room revenue is projected to expand at a compound annual growth rate (CAGR) of 7.8% to R20.6-billion by 2020, with visitor numbers expected to reach 11.8-million, a 4.8% increase from 2015.

Looking back at 2015, it is evident that the visa regulations had a significant impact on the local tourism industry. After growing at a CAGR of 8% between 2009 and 2013, the number of foreign overnight visitors rose only 0.2% in 2014, before falling 6.8%, from 9.5-million visitors in 2014, to 8.9-million in 2015 – the biggest decline in six years.

Overall, in 2015, there was a decline in the number of foreign travellers to South Africa from every region, except the Middle East and North Africa.

While stay units dropped more than 4% in Cape Town during 2015, PwC Southern Africa hospitality and gambling industry leader Pietro Cachillio notes that Johannesburg was not as severely affected by the visa regulations, “mainly due to it being a business destination.”

Stay unit nights rose 8% and room revenue increased more than 20% during 2015 in the economic heartland.

Further, the country still saw an 8.1% increase in revenue from hotel room accommodation to R14.2-billion, reflecting an increase in stay unit nights and a 6.5% rise in the average room rate.

Durban also appears to be on track for a solid year ahead, with an 11% increase in stay unit nights and a 22% increase in room revenue recorded so far this year.

Meanwhile, as the visa regulations were slightly relaxed in October, paired with a devaluation of the currency, an uptick in the first quarter of this year was experienced, with South Africa seeing its first one-million visitors in January. International visitor numbers rose by 16.8% between January and April – a 15% year-on-year increase.

The 6.8% decline in 2015 was also offset by an increase in domestic travel, which led to small gain in stay unit nights and an 8.1% increase in room revenue, as the average room rate increased by 6.5%.