Hotels locally more expensive than in South Africa

Namibia will have to put more effort in terms marketing to persuade tourists to visit the country as local hospitality establishments are more expensive than in neighbouring South Africa.

According to Simonis Storm (SS), citing an industry expert, hotels in Namibia are 23% more expensive than in Cape Town or Johannesburg.

In addition, higher food, fuel and utility costs will weigh on profit margins and could potentially lead to higher room rates. According to the Namibia Statistics Agency (NSA), in March 2022, transport inflation stood at 13.8%, while an inflation rate of 4.7% was recorded for food.

“We do expect prices at local hospitality establishments to increase in coming months, owing to rising cost pressures,” SS said.

Tourist is an important sector and contributes significantly to Namibia’s gross domestic product (GDP). After a massive contraction of 30.4% in 2020, the sector posted positive growth of 10.4% in 2021.

A slow recovery in tourism resulted from Namibia’s low vaccination rates, global travel restrictions and new variant infection outbreaks amongst others, SS said.

On the bright side, Simonis Storm noted some positive developments that could boost the inflow of foreign arrivals.

In addition to flight schedules of Fly Namibia, Airlink, Eurowings and Qatar, Ethiopian Airlines has increased their number of weekly flights to Windhoek from four to five and TAAG increased their weekly Windhoek trips from two to three from the end of March. Airlink currently operates about 45 flights between Namibia and South Africa per week.

“In the absence of Air Namibia, we remain positive on seeing an increased inflow of foreign arrivals due to above mentioned airlines increasing operations in Namibia,” SS said.

Figures

During March 2022, the national occupancy rate stood at 28.6%, compared to 20.1% in March 2021 and 25.4% in March 2020.

“This is the highest national occupancy rate since December 2021, but far below pre-pandemic levels,” SS said.

The proportion of Namibian visitors at local establishments continue to decline. 43.7% of visitors were Namibians during March 2022. Most visitors came from Germany, Switzerland and Austria (27.9%), South Africa (12.0%), France (3.6%) and Benelux (2.04%) during March 2022.

Both hotels below and above 30 rooms recorded the highest occupancy rates in March 2022 at 45.3% and 39.1% respectively, followed by bed & breakfasts (39.0%), tented camps (28.6%), lodges (23.6%), guest farms (23.4%), guesthouses (19.1%), and rest camps (15.4%), SS pointed out.

Regarding purpose of travel into Namibia, 88.0% came for leisure, 6.6% for business and 5.4% for conferences. Hospitality establishments in the coastal area recorded the highest occupancy rate (41.3%), followed by the central area (39.4%), southern area (27.9%) and northern area (18.2%) in March 2022. The Easter weekend has likely boosted occupancy levels in the coastal area during the month under review, SS added.

Namibia’s high season (starting in July) is fast approaching and numerous establishments allude to bookings being full in the upcoming months. Demand from the self-drive market has also increased considerably in recent weeks, however local available cars are in short supply. Local rental companies had a fleet of about 8,500 vehicles prior to the pandemic outbreak and currently have about 2 000. Rental companies are struggling to source new vehicles in order to rebuild their fleet in response to rising demand, SS said.