South Africa’s hospitality sector is facing growing concerns that threaten its long term stability and growth, according to the inaugural Hospitality Asset Management Company (HAMAC) South African Hoteliers Report.
The Report reveals that 77% of hoteliers identify human capital as one of the biggest obstacles to business sustainability, while 58% say profitability has either stagnated or declined over the past five years, despite signs of post-COVID demand recovery. The findings are based on a recent survey done by HAMAC, in association with Tourism Update.
Based on responses from hospitality executives and managers across the country, the findings paint a sobering picture of an industry under sustained pressure, caught between revival and resilience. Rising operating costs, constrained margins, infrastructure failures and regulatory complexity are placing increasing strain on both businesses and the people running them.
Beyond headcount shortages, the Report highlights a skills and capability gap across the sector. Close to 70% of respondents reported dissatisfaction with the competency levels of newly recruited graduates, raising concerns about the long-term readiness of the hospitality workforce.
Operational margins remain constrained, with labour costs cited as a major pressure point by 37% of respondents, followed by utilities – particularly electricity – at 34%, and food costs at 29%. Nearly 30% of hoteliers identified red tape as a material operational constraint, adding to administrative burden and limiting the ability to respond to cost pressures through pricing or efficiency gains.
Capital investment is also being deferred. More than half of respondents (54%) have delayed essential upgrades or improvements due to funding constraints, freezing growth and limiting competitiveness.
There are, however, rays of light, particularly in terms of the desire to invest more intentionally in the development of human capital and the application of technology. Nearly half of respondents (46%) would prioritise workforce development if operational pressures like water and electricity costs are removed.
Similarly, the majority of hoteliers are leaning into innovation, with just over 77% actively exploring
new technologies to streamline operations. Only around 23% are not currently pursuing tech
solutions. This signals a sector increasingly focused on efficiency, automation, and smarter resource management. This focus on efficiency ultimately serves to reduce manual workload, freeing up capacity to enhance the guest experience.
The findings also point to a growing trust deficit within the sector. Seventy percent of respondents reported limited confidence in SA Tourism and the Tourism Grading Council of South Africa (TGCSA), while sentiment towards the Federated Hospitality Association of South Africa (FEDHASA) was evenly split, highlighting concerns around advocacy effectiveness and sector representation.
Key findings at a glance:
- Management stress at critical levels: 42% of managers experience stress symptoms weekly or daily that impair decision-making
- Margins under severe pressure: Top cost drivers are labour (37%), utilities (34%) and food costs (29%)
- Capital constraints freezing growth: 54% of respondents have delayed essential upgrades due to funding limitations
- People-first intent if systems improve: 46% would prioritise investment in people if infrastructure reliability improved
- Technology adoption gap: 77% are exploring new technologies, yet 76% have no AI strategy
- Erosion of trust in industry bodies: 70% lack confidence in SA Tourism and the TGCSA; sentiment towards FEDHASA is evenly split
“The findings confirm what many hoteliers experience daily: recovery on paper is not the same as recovery in practice,” says Anton Gillis, CEO of HAMAC. “The challenges facing the sector are largely systemic rather than strategic. Without meaningful intervention, these pressures will continue to erode resilience and limit growth.”
HAMAC is calling for urgent, coordinated action from government and industry stakeholders, including improved service reliability, streamlined regulatory frameworks and reduced administrative burden to allow operators to focus on running viable, sustainable businesses.
“Hospitality must be treated as strategic economic infrastructure,” Gillis adds. “The sector creates jobs, drives regional development and supports local economies, but to remain competitive it needs the right support structures in place.”
The Report concludes that while South Africa remains a world-class tourist destination, the hospitality sector’s ability to deliver on its potential will depend on coordinated action across skills development, infrastructure reform, targeted investment and collaborative planning.
