Investors and operators in the hotel industry have seen a marked increase in occupancies and income in 2006, no doubt prompting more developers and operators overseas to set their sights on South Africa.
 
Australia's Stella Group recently announced the acquisition of SA-based hotel operator Protea Hotels for R1,48bn, while another offshore hotel group is rumoured to have targeted JSE-listed City Lodge Hotels for a buyout.

Both come on the back of a healthy increase in hotel occupancies, room rates and revenue per room (RevPAR). Latest figures from the HotelBenchmark Survey by Deloitte show that average occupancies for five-star hotels jumped nearly 7% to 70% in December 2006, the highest level in many years. Rising occupancies and room rates mean that offshore players can earn better returns on their hotel investments than was the case a few years ago, when SA was still struggling with an oversupply of hotel rooms.

Wendy Smith, director of Deloitte's tourism, hospitality and leisure division, says over the past year there's been a significant increase in enquiries from international groups interested in developing new hotels in SA.

The biggest challenge, says Smith, is to find suitable sites for any proposed new developments in popular areas such as Cape Town and Sandton, north of Johannesburg. "Major international hotel brands want to be in the right location and there are limited prime spots still available."