SA hospitality sector grows, but basic infrastructure still a challenge

While SA’s hospitality industry is on the path to recovery, the Federated Hospitality Association of SA (Fedhasa) warns that basic infrastructural challenges will hamper further growth.

Stats SA’s latest data shows an overall growth in the hospitality sector in the first quarter of 2023, with hotels the driving force.

Income from hotels showed positive growth at 69.1%, an increase of 6.2% on January 2023.

The food and beverage segment remains under pressure, though it is showing signs of growth in some areas. 

The most significant growth has been in bar sales, at 35.5% compared to 2022. 

Restaurants and coffee shops have shown strong performance, with a 15.7% increase in January and a 16.4% increase in February.

“We are delighted to see the strong growth in the hospitality sector as evidenced by the latest Stats SA report, particularly the 35.5% increase in bar sales. This is a testament to the resilience of our industry and its ability to recover from the challenges of the pandemic,” said Fedhasa chair Rosemary Anderson.

“It is important the data is viewed within context, especially in terms of the positive growth in the food and beverage data. 

“Despite this growth, profit margins are being squeezed due to rising food costs, electricity challenges and the cost of additional overheads, such as diesel for generators. 

“Businesses also have to contend with water shortages or an erratic supply. The south coast of KwaZulu-Natal is particularly struggling with this. As a result, businesses must invest significantly in alternative energy and water sources to keep the lights on and ensure supply.

“Basic infrastructural challenges are putting additional pressure on an industry, which has had a steep hill to climb in terms of recovery. 

“We have to deliver ‘business as usual’ for our guests, but these challenges are affecting our ability to grow, to contribute to the economy and to create jobs.

“It is therefore critical for local municipalities and government to improve basic infrastructure, such as electricity and water supply, to ensure a positive guest experience and position SA as a favourable destination for local and international visitors.”

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