Hotel room shortfall for World Cup

Perched on the precipice of the world's biggest footballing event, the 2010 FIFA World Cup, accommodation or rather the lack of accommodation is becoming a concern of major proportions. Despite the plethora of new hotels being erected around the country, it has become doubtful that a high enough proportion of available rooms will fall under the luxury category.

Doomsday protagonists

Doomsday protagonists, who doubted South Africa's readiness for the World Cup, silenced by the emergence of world-class stadia and associated infrastructure, are now attempting to talk down the economy and persuade would-be investors to take their capital elsewhere. Sub-plots aside, this type of questionable commentary could have long-term detrimental effects.

The huge and continued growth of hotel development in South Africa is not just testament to the faith of investors, but reflects the growing need for world-class accommodation throughout the country.

Hospitality industry upbeat

While the global economic slowdown continues, South Africa's hospitality industry remains upbeat with ongoing positive growth reflected in the hotel market, and with major global operators clamouring to gain a presence. This is the February 2009 view of Joop Demes, CEO of Pam Golding Hospitality, who added that "at the outset of 2008 we noted the increasingly positive trend in this industry, which was evident despite widespread panic regarding the oil price, inflation and electricity shortages and tariff hikes".

"Now, a year later, we remain extremely optimistic regarding the prospects for the hospitality industry in South Africa and its ongoing resilience," he said.

"To understand why our country is faring so well when compared to the rest of the world we need to bear in mind that in South Africa overall, approximately 91 percent of every single-bed night that is sold in the hotel industry is sold to someone who lives in Africa. Over the past five years we have experienced exceptional growth in GDP and, while this has slowed considerably, our economy is still growing. In addition, South Africa has two other unique global competitive advantages - strong liquidity, and being host for the prestigious 2010 World Cup, which takes place in less than 500 days," said Demes.

Developers struggling in Western Cape

The Western Cape particularly looks set to fall short in the luxury sector, with developers struggling to complete projects in time for the World Cup.

The banking fraternity's hesitancy to provide funding, buoyed by negative, unsubstantiated commentary, is also a factor in time delays that may well contribute to the failure to provide enough accommodation.

Understandably twitchy as a result of global recessionary factors, the tightening of purse strings by banks may well detrimentally affect the South African economy by choosing to ignore the World Cup as a possible springboard out of the recession.

More mature view

Established international hotel chain, The Radisson, takes an overall more mature view of the long-term benefits in further establishing itself in South Africa. Hoteliers are perhaps better judges of existing markets with more experience than estate agents and maybe even journalists.

With continued growth in tourists visiting South Africa over the last 10 years, a blinkered view of a cyclical recession, like any sensible investor, should be factored into all long-term projects.

Call from Danny Jordaan

To strengthen the call for more 2010 accommodation, last month, Danny Jordaan, head of the 2010 FIFA World Cup Local Organising Committee, said South Africa still needs 200 000 beds to accommodate football tourists.

"We must find 200 000 beds. If there is more accommodation available that we don't know about, we would like to hear about it, because we need more beds."

A percentage of those beds will be needed within the luxury sector and even a conservative figure of 15 percent equates to some 30 000 beds.

The World Cup draw, to take place at the beginning of December, will no doubt trigger a flurry of bookings throughout the industry and those of a doomsday mindset will have to look elsewhere to feed their insatiable appetite for disaster.

Look before you leap

The very same cautious bankers whose decisions are based to a degree on what they read in the broadsheets, should take note - look before you leap may be the maxim that they live by today. Perhaps, he who hesitates is lost would be more appropriate.

The buildings that may well have to be demolished will be those that housed the banks, what other use would a glossy, glassy structure with vaults have.