Cape Town's hotel surge: Why investors must focus on fundamentals
“Cape Town has always had something special,” says Guy Stehlik, founder and CEO of Bon Hotels. “This is a city where things work far better than most other metros across South Africa. Infrastructure holds up when it matters most; services get delivered; people take genuine pride in how they run things here.”
That reliability, rare in many markets, is a key factor behind the surge of investor confidence. CoStar data shows Cape Town leading the country with a 72.5% occupancy rate, the highest in South Africa.
Stehlik warns, however, against repeating the mistakes of earlier boom periods: “I remember what happened back in the late nineties when Olympic fever swept through Cape Town.
Hotels started springing up everywhere on nothing more than hope for global attention, but then Athens was chosen instead - and reality came crashing down as oversupply dragged on occupancy rates for years afterwards.”
Who carries the risk?
While international brands add credibility and management contracts, Stehlik notes that South African developers remain the ones assuming most of the financial exposure: “South African developers read our market with far more accuracy than anyone working from an overseas office ever could. International brands bring management contracts and logos - but rarely put any real financial weight behind construction or operations themselves.”
Stehlik argues that long-term sustainability rests not on lifestyle concepts or social media buzz, but on consistent business travel: "Not many people want to talk about corporate demand when rooftop bars are making headlines,” he says candidly. “Yet Monday through Friday bookings keep properties viable year after year."
He adds that while leisure is subject to exchange rates and seasonal swings, business, government, and domestic travel ensure a steadier base.
Substance over style
For developers rushing to break ground, Stehlik’s advice is clear: "Once initial excitement cools off, fundamentals become everything.
"What keeps owners sleeping well during economic shocks isn’t Instagrammable rooftop bars - it’s repeat bookings driven by corporate clients who value reliability above fashion."