Let’s be clear about what is happening on the ground. South African hotels are increasingly running two businesses at once.
The first is hospitality, service, sleep quality, comfort – the details that make a stay feel effortless. The second is private infrastructure, power continuity, water security and operational contingency planning.
That second business is not a strategic choice. It is a forced response to an environment where core services are unreliable.
The recently launched South African Hoteliers Report by HAMAC has found that critical infrastructure failures, including blackouts, are viewed as some of the most severe threats to operations and revenue. It also records a clear trend: electricity, water and sewerage infrastructure are absorbing a growing share of expenditure with operators installing solar systems, boreholes, reverse osmosis plants and backup generators to cope with unreliable municipal supply, water quality issues and energy reliability.
This is not a “green upgrade” story. It is a survival story.
Load shedding is a controlled process; the cost is not controlled.
Eskom describes load shedding as “a controlled process” used to protect the power system from a total blackout. Hotels understand that logic but they live with the consequences. Guests do not get to pause their expectations because the grid is under strain. Lifts must work. Wi-Fi must hold. Safety lighting must stay on. Kitchens must keep food at safe temperatures. Laundry must run.
Even if load shedding reduces, the cost does not disappear. Once a hotel has bought generators, installed solar and built redundancy into operations, those assets still require maintenance, insurance, servicing and often diesel as backup.
The Council for Scientific and Industrial Research has repeatedly highlighted how large the economic footprint of load shedding can become when measured using a cost of unserved energy approach. Hotels are not insulated from that reality; they are forced to self-insure against it.
Water insecurity is now part of the guest experience whether we like it or not.
The same shift is happening with water. The Department of Water and Sanitation’s Blue Drop programme assesses drinking water quality and the related No Drop reporting focuses on water losses and non-revenue water across municipalities. The department’s National State of Water Report also points to persistent municipal performance and loss challenges that require ongoing monitoring and improvement.
For a hotel, water insecurity is not theoretical. It affects hygiene, housekeeping, food and beverage, pools, staff accommodation and the ability to deliver consistent standards.
The report makes the operational response explicit. Many hotels are investing in boreholes, filtration, reverse osmosis, storage and backups, and several operators note that the short-term costs of installation, operation and maintenance can outweigh immediate financial benefits, creating ongoing financial strain rather than clear savings.
That is the hidden infrastructure tax. Hotels are spending like utilities to deliver basics not luxuries.
Where does the money come from?
In theory, you recover the cost through higher room rates. In practice, it is not that simple. Hotels compete in a price-sensitive market and many are already absorbing rising costs without the pricing power to match.
This financial pressure creates a vicious cycle. It directly impacts the very assets hotels rely on, the property itself and the service that happens inside it.
In the report, almost 34% of respondents cite utilities as the biggest pressure on margins, and electricity costs are described as “severe” and “critical to operations” because rising tariffs, load shedding and backup power costs have turned a manageable overhead into a near-universal crisis. The squeeze is cumulative. Labour pressures and red tape stack on top of utility costs and leaders emphasise these pressures rarely appear in isolation.
Over time, that compounding pressure shows up in profitability. While nearly 42% report improvement compared to five years ago, the majority of hoteliers (58%) say profits have stayed the same or declined with 28% reporting worse profitability. That is what “recovery on paper” looks like in practice. As I put it in the report’s release, “recovery on paper is not the same as recovery in practice”.
When you cannot cut staff, cannot turn off the generator and cannot ignore compliance, the only thing left to defer is capital expenditure. The report shows 54% of hoteliers have delayed upgrades due to funding constraints or economic uncertainty. That is the part guests feel sometimes without being able to name it: slower refresh cycles, tired rooms, postponed upgrades and thinner service layers as teams are stretched.
So, yes, guests are paying, through price and through opportunity cost, what a hotel cannot invest in when it is forced to fund basic reliability on its own.
This is not just a hotel problem; it is a competitiveness problem.
Tourism is an economic engine. Statistics South Africa’s Tourism Satellite Account reports that tourism direct GDP increased to about R234.7 billion (US$14.7 billion) in 2022 and the sector directly employed about 733 385 people that year. Hospitality is therefore not a lifestyle add-on; it is strategic economic infrastructure.
When hotels are forced into permanent self-infrastructure mode, the sector’s ability to sustain jobs, attract investment and compete globally is weakened. That is why the phrase “state failure” belongs in this conversation – not as political theatre but as an accurate description of what happens when the burden of basic service reliability is downloaded onto private operators.
At HAMAC, our role is to provide the data and operational intelligence that helps owners and operators navigate these impossible trade-offs, optimise these forced investments and remain viable while the broader infrastructure landscape evolves.
South African hospitality will keep finding ways to protect the guest experience. It has to. The question is whether we are willing to acknowledge what it now costs to deliver something as simple, and as fundamental, as a good night’s sleep.
