The South African hotel industry delivered a strong performance in May 2025, reflecting a resilient recovery and increased demand across a range of regions and hotel categories. The latest data from STR, LLC covering May 2025 compared to May 2024 reveals significant improvements in key performance metrics such as occupancy rate (OCC%), average daily rate (ADR), and revenue per room available. This article delves into highlights, regional trends, outstanding performers and provides a comprehensive overview of the industry's trajectory.
Nationally, the South African hotel sector rose from 55.7% in May 2024 to 59.5% in May 2025, rising from ZAR 1,610.11 to ZAR 1,747.04, driving a robust 16.0% surge from ZAR 896.67 to ZAR 1,039.81. These profits reflect a healthy balance between increased demand and pricing power, with room revenues also increasing by 16.0%. The figures for around 2018 (YTD) further highlight this positive trend, with occupancy rates increasing by just 1.7%, ADR increased by 9.8%, and RevPAR increased by 11.7%.
Data drawn from a sample of 230 properties (representing 29,285 rooms) from the census of 431 properties (52,742 rooms) highlights wide participation and reliable insights. A 0.1% increase in room availability and a 7.0% increase in rooms on sale indicates that the industry is effectively capitalised to a growing interest in travelers.
Star Rating: Diverse Performance Between Segments
5 Star Hotels: Premium pricing will benefit
The 5-star segment showed moderate occupancy growth of 0.1%, from 60.9% to 61.0%, but was excellent at pricing, with ADR increasing by 8.1% to ZAR 3,212.17. This increased RevPAR of 8.2%, reaching ZAR of 1,958.47. However, YTD figures reveal the challenge, with occupancy dropping by 3.5% and RevPar growth driven primarily by 13.1% ADR hikes. Segment performance suggests that luxury travelers are willing to pay a premium, but occupancy remains sensitive to economic factors.
4 Star Hotels: Strong Occupation and Revenue Growth
The four-star category was outstanding, with occupancy rates increasing by 7.1% to 61.3% and ADR increased by 14.1% to ZAR 1,617.17. This reached ZAR 991.61 and converted to an astonishing 22.2% RevPAR growth. The YTD data reflect this intensity, with occupancy rates increased by 1.6%, ADRs increased by 12.3%, and RevPAR growth of 14.0%. The segment's ability to attract both leisure and business travelers and competitive pricing positions it as a key driver for the industry's recovery.
3 Star Hotels: Value-driven Demand
The 3-star segment recorded the highest occupancy growth at 11.0%, reaching 58.0% with a modest ADR increase of 4.2% in ZAR 1,202.09. This caused a 15.7% RevPAR jump on ZAR 696.73. The trend for YTD shows consistent profits with 11.1% RevPAR growth with 4.3% occupancy and 6.5% ADR. The value-driven appeal of the 3-star property continues to resonate with budget-conscious travelers, especially domestic tourists.
Regional highlights: Mixed but promising photos
Western Cape and Cape Town: Tourist Country
The Western Cape, led by Cape Town, is the cornerstone of South Africa's tourism industry. In this region, occupancy increased by 1.6% to 59.5%, with 10.8% ADR rising to ZAR 2,441.26, and 12.5% RevPAR gain increased to ZAR 1,452.10. Cape Town itself saw a 1.5% increase in occupancy to 60.3%, ADR increased by 13.9% to ZAR 2,898.59, and a 15.6% increase in RevPAR to ZAR 1,747.38. The YTD figures are even more impressive, with Cape Town's revpar increasing by 21.6%, driven by an increase in ADR of 18.1%.
In particular, Cape Town's four-star segment was excellent, with an increase in occupancy of 2.9% and ADR jumps of 22.8%, leading to a RevPAR gain of 26.4%. The 5-star segment also worked strong, with an increase in occupancy of 2.6% and ADR growth of 14.0%. The regional attraction as a global tourism destination, enhanced by cultural attraction and natural beauty, continues to drive demand.
Gauteng: Business Travel Drives Growth
Gauteng, the South African economic hub, saw its occupancy rate rise by 10.8% to 59.8%, ADR increased by 4.6%, ZAR 1,435.17, and a RevPAR gain of 16.0% to ZAR 857.97. Pretoria and surroundings are outstanding, with an astounding 31.3% surge in occupancy to 62.7% and a RevPAR increase of 43.2% on ZAR 830.67. Sandon and Johannesburg also performed well, with a RevPAR increase of 9.3% and 18.5%, respectively.
Gauteng's four-star segment led by growing 17.5% occupancy and 27.0% RevPar, reflecting strong business and meeting-related demand. The region's recovery highlights its role as a commercial centre, with the hotel benefiting from both national and international travellers.
Kwazulu-natal: results mixed with bright spots
Kwazulu-natal gained 13.9% RevPAR gain on ZAR 775.14 with 5.3% occupancy increased to 57.6%, with 8.2% ADR rising to ZAR 1,345.30. Umhlanga was the highlight, with the 13.5% occupancy rising to 66.2% with a 14.2% increase in RevPAR. The 3-star segment also worked strong, with an occupancy profit of 12.1% and a RevPAR growth rate of 26.7%.
However, the 5-star segment struggles, with a decrease in occupancy of 18.5% and a 24.5% RevPAR drop, suggesting challenges in attracting high-end travelers. Durban's mixed performance saw a 3.6% drop in occupancy, while a 26.3% increase in RevPar driven by 31.0% ADR hike indicates that the pricing strategy is compensating for a decline in occupancy.
Emerging Regions: Freedom and the Glow of Limpopo
Free State reported that a 22.7% occupancy rate increased to 66.0% for ZAR 750.55, driven by both leisure and business travel, and a 37.0% RevPAR surge was reported to be on ZAR 750.55. Limpopo also worked well, with an 11.3% occupancy profit margin of 68.3% and RevPar increased by 23.6% to ZAR 842.54. These regions are often hidden by major hubs and have emerged as attractive destinations for travelers seeking unique experiences.
Interesting insights and trends
An interesting trend was the significant RevPar growth in small markets such as Pretoria and surroundings (43.2%) and Free State (37.0%), surpassing major tourism hubs. This suggests that secondary destinations are gaining traction, perhaps due to reduced costs, unique products, or increased domestic tourism. Additionally, consistent outperformance across the region in the 4-star segment emphasizes versatility to meet the needs of diverse travelers, from business guests to families.
Another notable observation is the resilience of ADR growth despite economic uncertainty. Hotels have successfully implemented dynamic pricing strategies to maximize revenue, particularly in high demand regions such as Cape Town and Gauteng. However, caution should be paid to some regions, such as Kwazulu-Natal (-23.4%), as YTD occupancy in the 5-star segment may decrease, reflecting changes in luxury travel preferences and competitive pressures.
The performance of the South African hotel industry in May 2025 shows a robust recovery driven by massive increase in occupancy across diverse regions, strategic pricing and rising demand. Major hubs like Cape Town and Gauteng continue to lead, but new destinations like Free State and Limpopo are carving out their niche. The 4- and 3-star segments are particularly resilient, have proven to balance affordable and quality, attracting a wide range of traveler bases.
The industry needs ongoing and continuing its momentum by looking ahead and continuing to invest in marketing, infrastructure and guest experience. With South Africa's rich cultural heritage, stunning landscapes and vibrant cities, the hotel sector is well suited to exploit both domestic and international tourism growth, setting the stage for a promising future.
Source: 2025 STR, LLC/STR Global, Ltd. Transactions as “STR.”
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