FEDHASA sounds alarm after hospitality survey finds staffing shortages, rising costs threaten sector

South Africa’s hospitality sector may be welcoming guests back, but behind the scenes, many operators say the industry is still fighting for survival.

A new industry survey shows that staffing shortages, rising operating costs, and limited confidence in key tourism institutions are combining to slow what should have been a post-pandemic recovery. According to the inaugural South African Hoteliers Report by Hospitality Asset Management Company (HAMAC), more than three-quarters of hoteliers now see human capital as the single biggest threat to long-term sustainability.

The report, based on a nationwide survey conducted by HAMAC in association with Tourism Update, finds that 77% of hoteliers are struggling to recruit and retain staff, while 58% say profitability has either stagnated or declined over the past five years, even as travel demand has returned.

“The findings confirm what many hoteliers experience daily: recovery on paper is not the same as recovery in practice,” says Anton Gillis, CEO of HAMAC.

Federated Hospitality Association of Southern Africa (Fedhasa) said the survey findings broadly reflect what the association is seeing across the sector, particularly around staffing and skills challenges.

Fedhasa national chairperson Brett Tungay said the issue is not simply a lack of candidates, but a lack of suitable candidates for a demanding service industry.

Tungay said while technical skills can be taught, the hospitality industry requires specific personality traits and the ability to operate under pressure.

“You can teach anybody to make an omelette and make a sauce, but can they work in a team, can they work under pressure? Not everybody is suited to that.”

This mismatch, he says, is driving high turnover among graduates entering hotels, resorts and restaurants.

Tungay adds that a large proportion of people working in hospitality have no formal qualifications and are trained in-house, often because operators recognise aptitude and attitude before credentials.

He also agreed that cost pressures are escalating rapidly.

Tungay highlighted electricity as a critical threat to sustainability, noting that at some resorts energy costs have risen from around 5% of operating costs to as much as 25–30%. At the same time, labour costs continue to rise faster than revenue.

“We’re not paying 5% revenue increases, but labour costs are skyrocketing,” he said, adding that some operators are being forced to reduce staff numbers in a sector that is inherently service-driven.

He warned that these pressures are hitting the mid-market hardest, which relies largely on domestic travellers who are themselves under strain from the rising cost of living.

While some operators are shifting focus towards higher-end and foreign markets to offset costs, Tungay said many countries are already 15–30% ahead of pre-COVID levels, while South Africa is still trying to recover lost ground.

“If you look at the competitive set worldwide, very few destinations haven’t seen double-digit increases in foreign arrivals,” he said.

The survey found that labour costs remain the biggest margin pressure, cited by 37% of respondents, followed closely by utilities, particularly electricity at 34%, and food costs at 29%.

Nearly 30% of hoteliers said regulatory red tape has become a material operational barrier, adding administrative strain at a time when flexibility is essential.

Beyond headcount, the report highlighted a worrying skills gap. Almost 70% of respondents expressed dissatisfaction with the competency levels of newly recruited graduates, raising questions about the long-term readiness of the hospitality workforce.

HAMAC called for coordinated action from government and industry stakeholders, including improved service reliability, streamlined regulation, and reduced administrative burden. “Hospitality must be treated as strategic economic infrastructure,” Gillis added.

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

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