Johannesburg — THE hospitality industry appears to have been caught out by the onset of the recession earlier this year, releasing thousands more rooms into the marketplace as demand for accommodation fell sharply.

Stats SA's October tourist accommodation figures released yesterday showed that year on year, "stay units" or rooms increased 3% to 111000. However, income for the accommodation industry plunged 11,2% to R1,76bn.

This was largely driven by occupancies falling from 55,7% last October to 48,7% this year while the industry achieved a marginally higher rate per head of R651,80, up from R645,50 last October.

The hardest-hit sector was the formal hotel industry, where occupancies in October fell 8,8 percentage points to 55,7%. The average rate achieved per room also fell from R797,90 last October to R779,20, pushing total income from R1,479bn last October to R1,278bn this year.

"No one foresaw that the economy would be hit so hard. All the new developments coming on stream now were commissioned in better economic times when they made sense. Now there is an oversupply of rooms," said Graham Wood, MD of Southern Sun hotels.

While next year's Soccer World Cup would provide some relief, Wood expected there would be a lull after the event before the sector began improving. "It will take another 18 months before all the extra rooms in the market are mopped up."

While the Statistics SA figures showed that an additional 1300 rooms came on to the market in the 12 months to October, thousands more, particularly in Cape Town, were expected to come on stream between now and the start of the Soccer World Cup in June.

New hotel developments have now ground to a virtual halt, with developers put off by the short-term oversupply and difficult funding .

"Hotels are fighting to fill their rooms, which in turn has hit revenue. Fortunately, while occupancies have dived, operators have managed to hold their rate due to SA hosting several big events such as the Lions rugby tour earlier this year," Brett Dungan, CEO of the Federated Hospitality Association of SA, said.

Dungan also expected the industry to take strain after next year's World Cup tournament, expecting about 20% of operators to close their doors in the following 18 months.

The only sector that recorded a decrease in available units was that of camping sites and caravan parks, which saw available units or sites decline from 13600 in October last year to 13100 this year.