Skills Gaps And Cost Pressures Weigh Heavily On South African Hoteliers, Report Finds

The report shows that 77% of hoteliers identify human capital as one of the biggest obstacles to business sustainability, while 58% report profitability has either stagnated or declined over the past five years, despite post-Covid demand recovery.

The findings are based on a survey of hospitality executives and managers across the country conducted by HAMAC in association with Tourism Update.

Beyond headcount shortages, the Report highlights a skills gap: nearly 70% of respondents were dissatisfied with the competency levels of newly recruited graduates, raising concerns about the sector’s long-term workforce readiness.

Operational margins remain constrained, with labour costs cited as the top pressure point (37%), followed by utilities – particularly electricity (34%) – and food costs (29%). Red tape affects nearly 30% of hoteliers, limiting their ability to respond to cost pressures through pricing or efficiency gains.

Investment and technology trends

Capital investment is being deferred, with 54% of respondents delaying essential upgrades due to funding constraints, freezing growth and limiting competitiveness.

However, the Report notes a strong focus on workforce and technology. Nearly half (46%) of hoteliers would prioritise workforce development if operational pressures like water and electricity costs were addressed. Similarly, 77% are actively exploring new technologies to streamline operations, though 76% currently have no AI strategy in place.

The survey also highlights a trust deficit in industry bodies: 70% of respondents lack confidence in SA Tourism and the Tourism Grading Council of South Africa (TGCSA), while sentiment towards the Federated Hospitality Association of South Africa (FEDHASA) is evenly split.

Key findings:

• Management stress at critical levels: 42% of managers experience stress weekly or daily that impairs decision-making• Margins under pressure: labour (37%), utilities (34%), food costs (29%)• Capital constraints: 54% delayed essential upgrades due to funding limits• Workforce investment contingent on system improvements: 46% would prioritise people development• Technology adoption: 77% exploring new technologies, 76% lack AI strategy• Trust in industry bodies: 70% lack confidence in SA Tourism and TGCSA; Fedhasa sentiment is evenly split

Anton Gillis, CEO of HAMAC, says: "The findings confirm what many hoteliers experience daily: recovery on paper is not the same as recovery in practice. These challenges are largely systemic rather than strategic. Without meaningful intervention, pressures will continue to erode resilience and limit growth."

HAMAC calls for urgent coordinated action from government and industry stakeholders, including improved service reliability, streamlined regulatory frameworks, and reduced administrative burden. “Hospitality must be treated as strategic economic infrastructure," Gillis adds.

"The sector creates jobs, drives regional development, and supports local economies, but it needs the right support structures to remain competitive."

The report concludes that South Africa remains a world-class tourist destination, but the sector’s potential will rely on coordinated action across skills development, infrastructure reform, targeted investment, and collaborative planning.