Foreign investors pumping money into one South African industry

Seeff Property Group hotel brokering specialist Peter Rowell explained that after the challenges of the pandemic years, South Africa’s tourism and hospitality sector is finally making a recovery.

This has caught the attention of investors, who are showing interest in these sectors. According to Rowell, significant successes have been reported this year, all speaking to the return in confidence.

Key performance indicators such as occupancy rates, average daily rates (ADR), and revenue per available room (RevPAR) are all showing upward trends.

Data from May 2025 indicates that the national hotel occupancy rate stands at 59.5%, while the average RevPAR is up 16.0% year over year.

Rowell said the figures for the Cape, currently the country’s most popular market for tourism products, look even better. An April report puts the average occupancy at 72.5% and the RevPAR increase at 20.1% YoY.

There is also strong growth within the Sub-Saharan African hospitality sector. Johan Cronjé, Regional Vice President for Marriott International’s Sub-Saharan African operations, recently commented that the energy in the hospitality industry in the region is incredible.

This trend is supported by more people travelling for business and leisure. Rowell added that high-end resorts and hotels are booming.

Southern Sun reported a rise in earnings in May, especially in the Cape, but also in Gauteng. Several big international hospitality brands are expanding in South Africa, including Radisson, IHG Hotels & Resorts, and Protea Hotels by Marriott.

Additionally, the new Club Med under construction in Durban, the first of its kind on the African continent, will further boost the sector’s confidence.

Opportunities for investors

The upside to investing in the South African tourism sector is that it is one of the most popular destinations in Sub-Saharan Africa.

The Cape, in particular, is seen as a highly desired international destination, regularly named the best City in the World for various reasons.

According to Rowell, the opportunity for investors is broad. The market appeals to everyone, from big brands to boutique hotels, five-star guests, safari lodges, wine estates and more.

Both local and international investors are increasingly drawn to the sector. The last decade has seen a notable uptick in international investors, including those from Britain, France, Germany, and, more recently, the Middle East.

Rowell added that improved profitability and growth fuel confidence and the opportunity for diversification in investment portfolios.

South Africa’s luxury tourism market has also been highlighted as an area which presents excellent opportunities for investors.

The InterContinental Hotels Group (IHG) commented that South Africa remains one of the continent’s most underserved luxury hotel markets.

“There is a lot of headroom for international brands to make their way into South Africa,” IHG Hotels & Resorts IMEA MD Haitham Mattar said.

Tshifhiwa Tshivhengwa, CEO of the Tourism Business Council of South Africa (TBCSA), told Daily Investor that although the luxury tourism market is well-established in some parts of the country, like Cape Town and the Kruger, it remains underserved.

“There’s strong demand, and it’s clear that even if we build more luxury properties, they would be absorbed by the market,” Tshivhengwa said.

“We have the foundation, but there’s still space for growth, especially if we continue to improve the overall tourism offering.”

South Africa’s favourable exchange rate makes it very appealing to international travellers, who can afford luxury hotels and resorts.

“But importantly, we also have a growing domestic market. South Africa’s middle class is expanding and seeking luxury travel experiences,” Tshivhengwa explained.

”There’s clearly room for more luxury developments, especially along our coastlines. For example, the Eastern Cape remains relatively underdeveloped in terms of high-end accommodation.”

Even KwaZulu-Natal, a very popular tourist destination, still has capacity. Development of the new Club Med, which will open in 2026, has been met with extremely positive sentiment.

“More investment is needed in this space, and the fact that a brand like IHG is speaking positively about South Africa is essentially a stamp of approval. It shows confidence in our destination’s appeal,” he said.

Issued on Daily Investor by Kirsten Minnaar | https://dailyinvestor.com/south-africa/93747/foreign-investors-pumping-money-into-one-south-african-industry/