Tourism sector is evolving upwards

After Covid, the South African tourism industry was bruised, cautious and uncertain about when international travellers would return in meaningful numbers. 

Now, across the country, construction sites and billion-rand refurbishments tell a different story. Hotels are expanding, international brands are entering the market and developers are repositioning older buildings as boutique hotels and aparthotels.

Luxury retail is expanding in key tourist precincts and a clear premiumisation trend is emerging.

South Africa’s tourism industry is evolving into something more sophisticated, more premium and more commercially sustainable.

Last year, the country welcomed about 10.5 million tourists, the highest level in a decade. Most visitors were from African countries.

Travellers from the UK, Germany, the US and the Netherlands are again booking trips in significant numbers.

Hotel performance data shows guests are booking further in advance, staying longer and spending more on in-hotel experiences. Add-on spending (on extras like food, beverage, room upgrades, transport and so on) rose sharply last year, increasing by more than a quarter. 

In other words, travel is becoming intentional again. It’s planned, curated and experience-led. The development pipeline reflects that confidence. Across Africa, there are hundreds of hotel projects under way but South Africa’s growth is steadier.

Instead of rapid expansion, the pattern is disciplined and brand-led. International operators are focusing on locations where long-term demand appears resilient.

The Western Cape remains the engine room of the hospitality story. Cape Town ranks among the world’s most desirable cities for travellers. More than 40 hotel projects and refurbishments are under way in the province.

The InterContinental Table Bay at the V&A Waterfront has undergone a refurbishment worth about R1 billion. 

The V&A Waterfront precinct itself is also entering its next phase. The area attracts about 24 million visitors a year. A major expansion around Granger Bay is being planned,
with development rights for about 440 000m² of new space and land to be reclaimed from the sea. The expansion could include hotels, residential buildings and commercial developments. In investment terms, it is a signal of long-term conviction.

Luxury retail activity reinforces the signal. Brands such as Louis Vuitton and Gucci are expanding their stores at the Waterfront. Luxury retailers typically grow where high-spend tourists cluster and their performance is often a useful barometer for premium hotel demand.

The Cape Town International Convention Centre has helped position the city among the top conference destinations globally, attracting large-scale international meetings that fill four- and five-star hotels for extended stays. Across the city, hotel developments continue to emerge.

Projects such as The Granger near the DHL Stadium, the Marriott Edition hotel in the Waterfront precinct and the redevelopment of the old Christiaan Barnard Hospital into a Mama Shelter hotel all reflect a diversification of hospitality formats. Luxury, lifestyle and boutique hotels are increasingly coexisting alongside aparthotels and mixed-use towers.

One of the firms working behind the scenes on several of the large-scale hospitality projects is Struxit, a national engineering and project delivery group.

Struxit chief executive Hannes Wagner says the new wave of hotel development is about carefully calculated long-term investment.

“Developers aren’t building hotels to increase room numbers anymore,” Wagner says. “We are seeing instead a shift toward integrated hospitality environments where hotels, residential components, retail and leisure offerings all work together to create a destination and an experience.”

Projects such as The Granger, near the DHL Stadium precinct, represent a new generation of developments in which hospitality becomes part of a broader urban ecosystem.

“These projects are being planned for long-term resilience,” Wagner explains. “Developers are looking at transport nodes, tourism demand, conference traffic and lifestyle infrastructure. It’s a far more strategic approach to hospitality development than what we saw a decade ago.”

Gauteng tells a different story. Johannesburg remains Africa’s financial capital and a major hub for business travel. 

Corporate travel drives much of the demand for four- and five-star hotels, supported by conferences, meetings and exhibitions. Instead of aggressive new development, the city’s hospitality sector is largely focused on upgrading and repositioning assets. 

The Four Seasons Westcliff recently completed a significant renovation, while other projects are repositioning older buildings into contemporary boutique hotels. The emphasis is more about defending premium rates.

KwaZulu-Natal is also experiencing a tourism shift of its own.

Durban continues to attract large volumes of domestic travellers, drawn by beaches, sports events and family holidays. 

But the real investment momentum is building along the province’s North Coast, where resort-style developments and lifestyle estates are reshaping the region’s premium hospitality offering. 

The Oceans Umhlanga development, valued at about R5bn, combines luxury residences and more recently, a Southern Sun hotel under construction. Nearby, the international resort group Club Med is preparing to open its first South African resort. Struxit also forms part of the team at the Club Med development.

Wagner says the arrival of an international resort brand of this scale signals a turning point for South Africa’s coastal tourism economy.

“When a global operator like Club Med commits to a site after searching for so long, it tells you something about the level of due diligence behind that decision,” he says.

“Infrastructure, accessibility, long-term tourism demand and surrounding investment pipelines all have to align. When they do, developments like this tend to become catalysts for further resort and hospitality investment in the region.”

The broader Zimbali precinct is evolving into a vast coastal development with a projected investment value exceeding R50bn. When projects of that scale begin to cluster in one region, they tend to attract additional hospitality investment.

Tourism growth is being concentrated in specific nodes. Coastal leisure destinations are expanding while business hubs are upgrading their product. 

This is not a rush of speculative development; it’s capital moving with conviction. Conviction capital rarely flows into markets where the fundamentals look fragile.

South Africa’s tourism sector faces the familiar structural challenges. Infrastructure constraints and safety perceptions remain part of the conversation.

Yet investors appear to be looking beyond the obstacles and focusing on a longer-term trajectory.

The country is not just adding more hotel rooms. It is refining the experience around them. 

Heritage buildings are becoming boutique hotels. Mixed-use towers are integrating hospitality into residential and retail ecosystems. Resorts are emerging along new coastal corridors.

For travellers, the maturing industry means more choice and more distinctive experiences. 

For investors, it means the hospitality sector is gradually shifting from volume to value.

And for a country that has spent the past few years proving it can recover from crisis, that shift may be the most encouraging sign of all.