South Africa Hotel Performance: March 2025 Comprehensive Analysis

South Africa Hotel Performance: March 2025 Comprehensive Analysis

The South African hotel industry delivered a dynamic performance in March 2025, as detailed in the latest STR Report. By examining critical metrics—Occupancy (Occ %), Average Daily Rate (ADR), and Revenue Per Available Room (RevPAR)—this article provides an in-depth analysis of national trends, star category performance, and regional variations compared to March 2024. With insights into year-to-date (YTD) data and regional nuances, we uncover the forces shaping the hospitality landscape and highlight opportunities for stakeholders.

National Performance: Resilience Amid Subtle Shifts

Nationally, South Africa’s hotel sector reported a slight occupancy dip of 0.2% to 64.0% in March 2025, compared to 64.1% in March 2024. Despite this, the industry demonstrated strong pricing power, with ADR rising 7.6% to ZAR 1,981.85 and RevPAR increasing 7.4% to ZAR 1,267.68. Room revenue grew by 7.3%, reflecting stable demand across a sample of 241 properties and 31,082 rooms, out of a census of 431 properties and 52,766 rooms.

YTD performance was even more robust, with occupancy up 0.8% to 61.3%, ADR climbing 9.6% to ZAR 2,159.92, and RevPAR surging 10.5% to ZAR 1,323.58. Room revenue YTD increased by 10.9%, driven by a 1.2% rise in rooms sold. These figures underscore a resilient market, buoyed by strategic pricing and sustained traveler interest, even as occupancy remained nearly flat.

Star Category Breakdown: Luxury Gains, Mid-Tier Holds Steady

5-Star Hotels: Premium Pricing Offsets Occupancy Decline

The luxury segment experienced a 3.9% occupancy drop to 65.7% but leveraged a 9.4% ADR increase to ZAR 3,974.71, resulting in a 5.1% RevPAR gain to ZAR 2,611.90. Room revenue grew modestly by 2.9%, despite a 6.0% decline in rooms sold. YTD data showed a stronger picture, with ADR up 12.9% to ZAR 4,451.00 and RevPAR rising 8.1% to ZAR 2,918.23, though occupancy fell 4.3% to 65.6%. The segment’s ability to command premium rates highlights its appeal to high-end travelers, with 46 properties and 5,996 rooms sampled.

4-Star Hotels: Stable Demand with Strong Revenue Growth

The 4-star category maintained near-flat occupancy at 65.2% (-0.4%), but a 10.1% ADR increase to ZAR 1,804.03 drove a 9.6% RevPAR rise to ZAR 1,176.00. Room revenue grew by 10.4%, supported by a 0.3% uptick in rooms sold. YTD performance was equally solid, with occupancy up 0.5% to 63.1%, ADR rising 10.8% to ZAR 1,891.14, and RevPAR increasing 11.4% to ZAR 1,192.66. Representing 94 properties and 12,596 rooms, this segment’s consistency makes it a cornerstone of the market.

3-Star Hotels: Modest Gains Across Metrics

The mid-tier 3-star segment saw a 0.7% occupancy increase to 62.7%, with ADR up 6.1% to ZAR 1,277.34 and RevPAR rising 6.8% to ZAR 800.92. Room revenue grew by 6.9%, mirroring the occupancy gain. YTD figures were particularly strong, with occupancy up 3.2% to 58.9%, ADR increasing 7.3% to ZAR 1,309.62, and RevPAR climbing 10.7% to ZAR 771.89. With 69 properties and 9,114 rooms sampled, this segment’s affordability continues to attract budget-conscious travelers.

Regional Performance: Contrasting Fortunes

Western Cape: A Powerhouse of Growth

The Western Cape emerged as a standout, with occupancy rising 2.7% to 75.8%, ADR increasing 10.9% to ZAR 3,079.87, and RevPAR soaring 13.9% to ZAR 2,334.86. Room revenue grew by 11.7%, despite a 2.0% drop in room availability. YTD metrics showed occupancy up 2.2% to 77.4%, ADR rising 15.0% to ZAR 3,432.93, and RevPAR increasing 17.5% to ZAR 2,657.92.

• Cape Town: The city led the region, with a 4.0% occupancy increase to 77.1%, ADR up 11.6% to ZAR 3,615.64, and RevPAR surging 16.1% to ZAR 2,787.68. The 5-star segment was exceptional, with a 6.3% occupancy rise and 19.5% RevPAR growth to ZAR 4,491.92. The 4-star segment also performed strongly, with RevPAR up 20.5% to ZAR 2,122.21.

• Winelands: Occupancy rose 2.4% to 70.9%, with ADR up 14.7% to ZAR 2,969.91 and RevPAR increasing 17.5% to ZAR 2,104.60, signaling strong demand for this scenic destination.

• Garden Route: The region faced challenges, with occupancy down 12.4% to 63.5% and RevPAR nearly flat (-0.4%) at ZAR 1,228.18, despite a 13.7% ADR increase.

  
  

Eastern Cape: A Surprising Surge

The Eastern Cape defied expectations, with occupancy surging 14.4% to 67.4%, ADR rising 6.9% to ZAR 1,129.23, and RevPAR jumping 22.4% to ZAR 761.41. YTD RevPAR grew 13.2% to ZAR 676.54.

• Port Elizabeth: The city was a key driver, with a 15.2% occupancy increase to 69.7% and a 27.3% RevPAR rise to ZAR 828.06, fueled by a 10.6% ADR increase to ZAR 1,187.98. This suggests growing appeal, possibly linked to domestic tourism or business events.

  
  

KwaZulu-Natal: Challenges in Luxury, Resilience in Mid-Tier

KwaZulu-Natal faced headwinds, with occupancy down 4.9% to 54.5% and RevPAR declining 9.4% to ZAR 697.87. Room revenue fell 5.6%, though room availability rose 4.2%.

• 5-Star Hotels: The luxury segment struggled, with a 26.3% occupancy drop to 43.4% and a 41.8% RevPAR decline to ZAR 1,050.91, despite a 48.4% increase in room availability.

• 4-Star Hotels: In contrast, this segment shone, with a 5.5% occupancy increase to 66.3% and a 2.9% RevPAR rise to ZAR 683.09.

• Durban: Occupancy fell 9.0% to 50.6%, but a 5.7% ADR increase to ZAR 891.42 limited RevPAR decline to 3.8% at ZAR 450.76.

• Umhlanga: Occupancy dipped 3.2% to 60.3%, with RevPAR down 11.4% to ZAR 975.48, reflecting pricing pressures.

  
  

Gauteng: Steady Performance with Pockets of Strength

Gauteng’s occupancy remained nearly flat at 59.3% (-0.5%), with ADR up 8.1% to ZAR 1,424.07 and RevPAR rising 7.6% to ZAR 844.70. YTD RevPAR grew 11.0% to ZAR 773.59.

• Sandton: The business hub saw stable occupancy at 60.3% (+0.2%), with a 10.5% RevPAR increase to ZAR 873.34. The 4-star segment excelled, with a 6.6% occupancy rise and 16.7% RevPAR growth to ZAR 982.79.

• Pretoria & Surroundings: Occupancy edged up 0.6% to 57.9%, with RevPAR rising 5.2% to ZAR 734.49, though room revenue growth was modest at 0.9%.

• Johannesburg: Occupancy was stable at 51.2% (-0.5%), with RevPAR up 7.6% to ZAR 689.38, driven by an 8.1% ADR increase.

  
  

Other Regions: Mixed Outcomes

• Limpopo: Occupancy rose 3.2% to 68.3%, with RevPAR up 11.3% to ZAR 823.59, reflecting strong demand.

• North West: Occupancy fell 8.7% to 60.7%, with RevPAR down 7.5% to ZAR 1,314.50, despite a 1.4% ADR increase.

• Mpumalanga: Occupancy dropped 5.1% to 52.3%, with RevPAR declining 6.9% to ZAR 552.30, signaling weaker performance.

  
  

Key Insight: Eastern Cape’s Unexpected Momentum

The Eastern Cape’s remarkable 22.4% RevPAR surge, particularly in Port Elizabeth, stands out as a highlight. This growth, driven by a 15.2% occupancy increase and 10.6% ADR rise, suggests the region is gaining traction, potentially due to increased domestic tourism, business conferences, or infrastructure improvements. This contrasts sharply with KwaZulu-Natal’s luxury segment struggles, highlighting the uneven recovery across South Africa’s hospitality market. The Eastern Cape’s performance warrants further exploration to understand the drivers behind its success.

Strategic Implications for Stakeholders

1. Capitalize on Premium Pricing: The 5-star segment’s ability to drive ADR growth, even with lower occupancy, suggests room to target high-net-worth travelers through tailored experiences.

2. Address KwaZulu-Natal’s Challenges: The luxury segment’s steep declines call for targeted marketing or operational adjustments to restore demand, while leveraging the resilience of 4-star properties.

3. Promote Emerging Destinations: The Eastern Cape’s surge offers an opportunity to market Port Elizabeth and surrounding areas as vibrant alternatives to traditional hubs.

4. Sustain Cape Town’s Momentum: Continued investment in Cape Town’s infrastructure and tourism campaigns can solidify its position as a global destination.

5. Optimize Mid-Tier Offerings: The 3-star and 4-star segments’ consistent performance indicates strong demand for value-driven options, ideal for capturing domestic and budget-conscious travelers.

   
   

Conclusion

March 2025 showcased a South African hotel industry navigating a complex landscape with resilience and opportunity. While national occupancy remained nearly flat, ADR and RevPAR gains signaled robust pricing confidence. The Western Cape and Eastern Cape emerged as growth leaders, with Cape Town’s luxury segment and Port Elizabeth’s unexpected surge setting benchmarks. Conversely, KwaZulu-Natal’s luxury challenges highlight areas for strategic focus. As the industry evolves, leveraging regional strengths, addressing underperforming segments, and aligning with traveler preferences will be key to sustaining growth.

Source: 2025 STR, LLC / STR Global, Ltd.