In a research study commissioned by Tongaat Hulett and conducted by GIW Consulting (Pty) Ltd, director Graham Wood says following an analysis of STR Global’s independent metrics of the Umhlanga Hotel market, several interesting conclusions arose. The node represents 4% of the South African market and 28% of the KZN provincial market and over the past three years has consistently outperformed the national market in terms of occupancies, rates and revenue per available room.
As a leading source of historical daily and monthly hotel performance trends, STR Global measures 340 South African hotels comprising 45 000 rooms including 15 uMhlanga hotels or 2 000 rooms. Wood says 41% of the uMhlanga STR market is weighted toward full service hotels with four and five-star hotels accounting for 20% each and three-star hotels accounting for 52%.
In 2015, the uMhlanga node recorded a revenue per available room growth of 13% and in 2016, an 11% growth was achieved.
“Corporate office growth in uMhlanga and the proximity of the King Shaka International Airport has seen an exponential growth in individual corporate travel demand for uMhlanga. International statistics show there is a strong correlation between office space demand and hotel rooms with the former being a sound forecast for the latter,” Wood says.
His comments considered the 2013 report from US commercial real estate company Cushman & Wakefield analysing the relationship between the demand for office space and hotel rooms sold in six US and five Canadian cities.
Hence, given the continuing increase in office space demand, Durban’s continued ability to host international and regional conferences such as the recent 21st International Aids Conference and the World Economic Forum on Africa in May 2017; together with the renewal of the city’s beachfront promenades to boost domestic and international tourism, it was pragmatic to assume there would be a corresponding rise in demand for hotel rooms in the next three to five years.
He adds that business and leisure tourism would continually be supported and boosted by Tourism KZN and Durban Tourism’s promotional efforts, particularly as the city prepares to host the 2022 Commonwealth Games.
The 206 key Radisson Blu Hotel, expected to open in 2018/19 and the recent Protea Hotel by Marriott uMhlanga 120-room expansion are projects responding to the positive uMhlanga market sentiment. Wood believes there is still capacity for at least another two hotels to be operational on the uMhlanga Ridge within the next three years to five years. uMhlanga Ridgeside, the 140-hectare piece of prime real estate situated within the heart of the economic node of uMhlanga offers the obvious opportunity for such new hotels and Tongaat Hulett is already engaging with a number of hotel industry players in this regard.
uMhlanga Arch, a R1.2 billion-rand mixed-use development located within uMhlanga Ridgeside, has responded to the market demands and will include a 200-bedroom premium branded hotel. Its ideal location, overlooking the magnificent Durban coastline and enjoying easy access to uMhlanga, La Lucia Ridge, Gateway and King Shaka International Airport, is well suited to both business and leisure travellers alike.
New investments must consider the needs of the target market segments especially corporate clients; an optimal mix of international and local brands; full service versus select service requirements; conferencing and meeting facilities and brand differentiation.
“A fresh, differentiated full or select service offering with quality meeting facilities will meet the corporate and leisure traveller needs. Many of the South African and international brands have launched differentiated lifestyle brands ideally suited to the uMhlanga Ridgeside landscape,” Wood says.
City hotels are one of the demand drivers (market sectors) that Tongaat Hulett is actively working on with a range of government agencies and industry players and where the region has existing or potential competitive advantages.