Government created mini-boom in hotel rooms ends in bust

We predicted this would happen here, here and here.  Thanks, government.  You created an artificial demand for these rooms that never existed by bringing the world cup here. Now many people, from hoteliers to B&B owners have sunk and wasted their hard-earned capital on something the market never really wanted. These real brick and mortar resources could have been allocated to something that would’ve been more profitable, which means consumers could’ve been better served, making us all better off. At least as with every boom-bust cycle, overinvestment will now mean cheaper hotel rooms in our major cities.

Hotels in quandary over failed boom

July 13 2011 at 05:00am

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Audrey D’Angelo

The Local hotel industry has been badly hit by the slow recovery from the recession in its main source markets overseas and the economic environment in this country.

The situation has been made worse by an over-supply of rooms, particularly in Cape Town, owing to the opening of new hotels in time for a tourism boom expected to follow last year’s World Cup, which has failed to materialise.

Prices in four-star and three-star hotels have been slashed as cash-conscious visitors search the internet for bargain accommodation. Even some five-star hotels are willing to negotiate prices, and some establishments have closed.

The availability of normally expensive accommodation at bargain prices has hit the three- and two-star hotels, which would otherwise have attracted this business, and some guest houses have closed for the winter season.

http://www.iol.co.za/business/business-news/hotels-in-quandary-over-failed-boom-1.1097913