RSA: South Africa, and particularly Cape Town, has become the African continent’s development hot spot for aparthotel projects.
According to a report in Cape Business News, South Africa’s hotel development market, and specifically Cape Town’s, is showing “astounding buoyancy despite a tough economy and the after-effects of the drought”. Aparthotels and serviced apartments are quickly gaining momentum, the report said.
Five-star hotel occupancy in Cape Town has increased by four per cent over the last year, while ADR was up by 2.6 per cent. The four-star sector’s occupancy has also increased, by 1.6 per cent, with a 2.2 per cent increase in ADR.
“Cape Town’s tourism resilience and 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,” said Wayne Troughton, managing director of HTI Consulting, a development consultant for the hospitality sector across Africa and the Middle East.
An example of the aparthotel trend 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 overseas buyers, which are leased back to an on-site hospitality management company, The Stay Collection, to operate as self-contained aparthotel units.
“Our owners of one-bedroom apartments have been seeing an average occupancy rate of 77.1 per cent for the last 12 months, with an average monthly revenue of R34,026,” said Heino Reuling, director of The Stay Collection. “For a two-bedroom apartment, the average occupancy rate has been 75.9 per cent and the average monthly revenue R45,170. Our three-bedroom apartments have provided an average of 53.6 per cent occupancy, with an average monthly revenue of R42,476.”
“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,” added Troughton.
Serviced apartments in Africa represents less than one per cent of all hotel rooms, whereas internationally the figure is closer to 10 per cent of supply. Several new aparthotel developments have opened in Cape Town in recent years, including The Protea North Wharf, Capital Mirage, Onyx, Radisson Blu Hotel and Residences, and Harbour Bridge Hotel & Suites. A Residence Inn by Marriott will form part of the Harbour Arch development on the Foreshore.
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