Looking for growth in the hospitality industry?

Kevan Govender

South Africa’s hospitality sector is improving, driven by a post-pandemic recovery in tourism and increasing domestic travel. According to Stats SA, the country recorded 8.5 million international tourists in 2023, marking a 48.9% increase from 2022. This growth presents significant opportunities for entrepreneurs looking to enter the hospitality industry, but also highlights the competitive nature of the market.

Kevan Govender, regional investment manager at Business Partners Limited, shares four essential tips for guest house and hospitality business owners to consider.

1. Know your market – both business and consumer

A deeper understanding of the market is critical to establishing and growing a successful hospitality business. “Before opening a guest house or any hospitality business, comprehensive research into your local environment and target market is essential,” says Govender. “You need to understand not only the tourist attractions situated around you but also the strengths, weaknesses, and offerings of your competitors.”

Knowing your visitors and their specific needs is equally important. “You need to identify and continuously invest in understanding your target demographic – whether it's international tourists, business travellers, or local holidaymakers – and tailor your services to meet their expectations,” Govender explains. Developing a unique selling proposition (USP) can help distinguish your business and attract the right clientele.

Govender also stresses the importance of networking within the industry. “Building relationships with other local businesses and attending industry events can provide you with helpful insights and open the door for potential collaborations,” he advises.

2. Prioritise customer service

The guests’ experience is the core of any hospitality business. “From the moment a guest makes a booking to the time they check out, they should feel that their needs are the highest priority,” says Govender. Exceptional customer service will not only encourage repeat visits but also generate positive word-of-mouth recommendations.

Hiring and retaining staff who possess strong interpersonal skills is key, and ongoing training is crucial to keep service standards high. “Training your team to deliver top-tier service and rewarding them for excellence will create a motivated and guest-focused workforce,” Govender notes.

Another service-related area that remains a top concern for many travellers is cleanliness and hygiene. “Recent studies show that over 70% of guests check online reviews for cleanliness ratings before booking,” Govender notes. A clean, well-maintained environment is essential to ensuring positive feedback, which will in turn drive future bookings. Collecting feedback from guests directly and addressing any concerns before they escalate to social media, is also vital to sustaining your online reputation.

3. Manage your finances strategically

Effective financial management is critical in the hospitality sector, especially given its seasonal fluctuations. “A solid business plan that includes detailed financial projections and risk management strategies will set you up for long-term success,” says Govender.

Monitoring cash flow, controlling expenses, and reviewing budgets regularly are key to maintaining profitability. “The hospitality industry can experience significant peaks and valleys throughout the year, so you need to plan for those quieter periods,” Govender advises. Offering off-season promotions or partnering with local businesses to create package deals can help maintain steady income during slower months.

Building an emergency fund is another recommendation to prepare for unexpected events, such as economic downturns or natural disasters. “We’ve learned valuable lessons from the Covid-19 pandemic, and having a financial buffer in place can help your business weather future crises,” Govender notes.

4. Stay ahead of industry trends

To maintain a competitive edge, hospitality entrepreneurs must keep up with the latest industry developments. “In 2024, digital transformation is revolutionising hospitality, with businesses increasingly adopting AI tools and automation to improve operations and enhance the guest experience,” Govender explains. From streamlined online bookings to personalised services, embracing technology can boost both efficiency and customer satisfaction.

Sustainability is another trend that’s gaining momentum. “Today’s guests are more environmentally conscious, so incorporating eco-friendly practices like energy-efficient technology, water-saving measures, and waste reduction can appeal to this growing demographic,” he says. Not only will sustainability practices lower operational costs, but they also enhance your business’s marketability. In an increasingly eco-aware world, environmental responsibility is no longer optional – it’s expected.

Finally, staying up to date with regulatory changes is essential for remaining compliant. “The hospitality sector has its own set of regulations, and keeping informed about any shifts will ensure you operate within the law,” Govender adds.

The South African hospitality sector is projected to grow by over 4% annually, with revenues expected to reach R30bn by 2029. For entrepreneurs looking to either establish or maintain a foothold in this lucrative industry, thorough planning and attention to market demands is key. “By understanding your market, prioritising customer service, managing your finances wisely, and staying ahead of industry trends, you can build a successful and sustainable business in the hospitality sector,” Govender concludes.