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Jan 9, 2020 | Investment

South Africa has the highest concentration of apartment-style hotel developments on the continent

South Africa’s hotel development market, and specifically Cape Town’s, is showing buoyancy despite a tough economy and the cumulative effects of the drought. Innovative ways of accommodating corporate and leisure travellers in serviced apartment-style hotels – or  ‘aparthotels’ – are quickly gaining momentum.

Recent figures highlight that five-star-hotel occupancy in Cape Town, where many aparthotel operators are located, has increased by 4% over the last year, while the average daily rate (ADR, the average realised room rental per day) has grown by 2,6%. The four-star sector’s occupancy, despite new hotel entrants, has also increased, by 1,6% and with a 2,2% increase in ADR.

“Cape Town’s tourism resilience and an attractive rate of return are making property buyers move to other, non-traditional options of buying property, like buying an apartment in a hotel property and then leasing it back to the hotel and enjoying a good monthly return that mirrors the uptick of local tourism,” says Wayne Troughton, managing director of HTI Consulting, a development consultant for the hospitality sector across Africa and the Middle East.

An example of this is Romney Park Luxury Apartments, previously a five-star all-suite hotel in Green Point which for six consecutive years won the AA’s Best All-Suite Hotel in South Africa award. Following a multimillion-rand redevelopment in 2018, Romney Park now offers for sale fully furnished apartments to local and international buyers, which are leased back to an on-site hospitality management company, The Stay Collection, to operate as self-contained hotel apartments, along with all the conveniences and luxuries of a five-star hotel.

“Aparthotels offer a more flexible product, whether staying on a short- or long-term basis, giving guests more space, and the opportunity to self-cater while also enjoying the food and beverage amenities on the property like a restaurant or room service. And prices aren’t vastly different when compared to traditional hotels, so it represents a greater value for spend,” says Troughton.

Serviced apartments in Africa represents less than 1% of all hotel rooms, whereas internationally the figure is closer to 10% of supply. South Africa’s highest concentration of serviced apartment-style hotel developments, with 1% of total rooms, is in Cape Town. Several new aparthotel developments entered the Cape Town scene in recent years, including The Protea North Wharf, Capital Mirage, Onyx, Radisson Blu Hotel and Residences, and Harbour Bridge Hotel & Suites. The Marriott Residence Inn, which forms part of the highly anticipated Harbour Arch development on the Foreshore, will start trading once the development is completed.

Website (Romney Park)
Website (HTI Consulting) 
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