Business confidence is on the rise in South Africa but a top hotelier warns investors to tread carefully
The man at the helm of South Africa’s most successful hotel group has warned leaders from across the hospitality sector to exercise caution over future investment in the country, two months after the election of its new president.
“It will take quite a while before the current positive sentiment in the country starts to reflect in the industry occupancies and for business and consumer confidence to return to the markets,” says Clifford Ross, Chief Executive of City Lodge Hotel Group (CLHG), which runs 59 hotels in six African nations – and two more set to open this quarter.
Few people in Africa can match his African hospitality industry experience: he started his career 44 years ago with the Holiday Inn Group and has lead CLHG since 2002. Ross is also Deputy Chairman of the Federated Hospitality Association of Southern Africa (FEDHASA).
He believes the election of South Africa’s new president Cyril Ramaphosa – who replaced corruption embroiled Jacob Zuma in February- could transform the tourism sector but he says a ‘wait and see’ approach makes sense.
“We believe that the new presidency will have a long-term positive effect on the hospitality industry in South Africa, both as a result of the president singling out tourism as an area for growth and job creation, as well the positive effect an uptick in business and consumer confidence will have on the economy,” he says. “It is however still early days and with an election year next year, caution is advised.”
Many political and business commentators have heralded President Ramaphosa’s arrival two months ago as the start of new era of prosperity for the country, but Ross says it will still take time and there is much damage to repair. “The last thing which we need as an industry is a “knee-jerk” reaction to what could be a blip on the radar,” he said.
“It has been an extremely negative time over the past few years and this has been evidenced in the state of the South African economy. Business and consumer confidence in the country has been at historic lows over the past two years due to the economic policy uncertainty and blatant corruption evidenced under the previous presidency.”
Ross has seen the country go through good times and bad and it is second nature to the man to navigating CLHG through the roller coaster of South African politics.
“We believe that we know our ‘home’ market better than most, having successfully grown the group in SA at a pace which reflects both the growth and demand patterns for rooms in a very restricted economically active market,” says Ross. “CLHG will therefore continue our growth in SA where we see financially viable long-term opportunities.”
He does not believe that the South African hospitality industry needs immediate growth because many rooms are still failing to find guests. “Oversupply of rooms in a number of areas is still very far from being absorbed,” he says. “South Africa will need an annual average industry occupancy in the upper 60 per cent to absorb the current number of rooms and to show returns on investments.
“Sandton is a typical case in point with occupancy in the 50s and Cape Town heading very quickly in that direction with occupancy down 7 per cent in the first two months of 2018… and declining.”
There are five key areas Ross has identified, which need to be addressed urgently before the hospitality industry in South Africa can move ahead with confidence:
- The current drought situation in the Cape, which is extending to other areas such as Port Elizabeth and Bloemfontein, and finding sustainable long-term solutions for what is becoming a national problem
- The land redistribution dilemma and how this is going to be addressed to the satisfaction of all parties as well as how it will ultimately affect foreign investment into the country
- The longer-term fallout of the Listeriosis in food scandal earlier this year. He reminds people of the effect on South Africa of the Ebola crisis in West Africa.
- Tourism and visitor numbers are also limited by the government’s visa and unabridged birth certificate debacle and that must be resolved, he says. The government must work with everyone to make SA an attractive destination to visit again.
- A stable and clear political landscape in the country (eg. policy decisions, elections, land expropriation)
Ross believes South Africa still has many political and structural hurdles to jump before the hospitality industry can thrive, but across Sub-Saharan Africa, he sees opportunity.
He explained that CLHG will see growth across the region: “The group is still investigating development opportunities for the City Lodge brand in Uganda (Kampala), Zimbabwe (Harare), Mauritius (Port Louis), Zambia (Lusaka),” he says. Alongside he is keen to see the growth of its other group brands – Town and Road Lodge – in Kenya and Tanzania.
And for South Africa he concludes: “Albeit that there might be a very faint light on the horizon for our industry in the next few years, there are too many unknown factors and influences which may upset the relatively positive sentiment of the moment.”
Clifford Ross studied at Wits Technikon from 1974 to 1977 and obtained a Diploma in Hotel Management. During his time with Holiday Inn, he held various management positions until 1983 when Sun International was formed through the merger of the casino/hotel operations of Holiday Inns and Southern Sun Hotels – after which he continued his career with Sun International until 1986. In 1987 he joined the City Lodge Hotels Group taking up the position of General Manager at City Lodge Randburg (now City Lodge Bryanston). Moving up the ranks Clifford was promoted to Operations Director in 1991, then Managing Director and in 2002 he was appointed Chief Executive.
Clifford attended Cornell University in America where he did the Advanced Management Programme. He is on the boards of the FEDHASA National, the Tourism Business Council of South Africa (TBCSA) the Tourism Enterprise Partnership (TEP) and the University of Johannesburg School of Tourism & Hospitality (STH).
In 2011, Clifford was recognised for his contribution to the industry by being awarded the Tourism Business Leadership Award and in 2014 he was awarded the University of Johannesburg Alumni Dignitas Award in recognition of his services to the hospitality industry during more than three decades. He has been married to his wife Rosemary Alexandra Ross since 1988, and they have three children.