Hoteliers expect that a strong conferencing pipeline for Sandton, including the securing of next year’s G20 Summit, will provide a much-needed boost to flagging average room rates (ARR) in the precinct.
According to January to May data from Smith Travel Research, five-star hotels in ‘Africa’s richest square mile’ have been grappling with ARRs that are well below the national average and 23% lower than those achieved in pre-COVID 2019. Sandton’s ARR of R1 411 is just 49% of the national average, with KwaZulu-Natal (R2 867) and Cape Town (R4 104) both comfortably exceeding 2019 levels.
On a positive note, occupancy rates at the high-end hotels in the precinct stand at 66%, exceeding the 62% achieved in Jan-May 2019. But, as advisory firm BDO highlights in its 2024 Tourism Trends report, the data indicates that hotel operators are “clearly sacrificing rate in favour of occupancy”.
Francois van Heerden, Chairperson of the Sandton Tourism and Business Association (STBA), told Travel News that hotels at the top end of the pricing range needed to lift their ceilings for the rest of the industry to follow, but had been challenged by a number of prevailing conditions.
“Safety remains a key concern in Sandton, as does urban decay, control of taxi associations with the need for safe taxi zones, and improved marketing of Sandton as a travel destination. Both Rosebank and Waterfall City are starting to make inroads as the new destination/trendy hub,” said Van Heerden.
G20 Summit to catalyse MICE sector
Representing the STBA Secretariat, Mandy Watson said a pick-up in events at the Sandton Convention Centre (SCC) over the past six months had been highly encouraging, with the momentum carrying over into 2025 and 2026.
“The SCC has a very high repeat business model with clients securing dates by committing several years in advance. Although this limits the space to accommodate new large events, there is an ongoing drive to secure new events into the future and to bring them to the SCC.”
She said securing the 2025 G20 Summit had been a major win for the sector.
“Obviously, this is the big talking point at the moment, and while it is expected that there will be an influx of related events and meetings, these are definitely still in the planning phase. The benefits of these events will be far reaching and will affect more than just the SCC, with hotels likely to benefit from the influx of delegates, coupled with the exposure that the country would get as a result.”
The business travel sector is additionally looking to emerge from a period of lower government travel spending and financial support for conferences.
“There seems to be a ‘wait-and-see’ approach from exhibition organisers and funding is being reviewed far more rigorously than in the past,” said Watson.
“It would be great if we could see South African Tourism, the South African National Convention Bureau (SANCB) and the Gauteng Tourism Authority (GTA) assisting SCC to attract more international trade shows and events.”
Watson said the positive outlook for the precinct had also been buoyed by new hospitality investments from major groups, including Minor’s first NH Collection property – launched on July 1 – and the scheduled Q4 opening of a Hilton hotel.
Call for enhanced marketing
Van Heerden said greater collaborative marketing efforts with government departments and associations were sorely needed.
“As an association with a diverse membership we have previously engaged with SA Tourism, the SANCB and the GTA to collaborate and develop Sandton as a destination of note. Unfortunately, our efforts have been fruitless.”
STBA has run one dual marketing campaign with GTA in the past year, but the association was “unable to get any feedback” on its effectiveness.
“We are able to gather information and specials from members pretty quickly, so providing products that both SAT and GTA could sell is easy for us. Our members are constantly looking to get involved in initiatives that will help to drive stronger GDP growth as that would automatically feed positively into everyone’s business.”
Enhanced safety and security measures remain a key point of discussion for the tourism and business communities of Sandton.
“The feeling is that increased discussions between the South African Police Service, the Sandton Central Improvement District and other stakeholders in the area would help. Weeding out the street forex trading which stimulates forex thefts would also help and there seems to be a need to improve the perception of Sandton and Johannesburg, and South Africa as a whole,” Van Heerden pointed out.