Hospitality investment in South Africa is increasingly moving beyond major cities, with developers expanding accommodation capacity in places such as Gqeberha as tourism demand strengthens after the postpandemic recovery.The Capital Hotels Group, in partnership with the Industrial Development Corporation (IDC), has launched a R270m hotel and apartment development in the Eastern Cape coastal city, adding 145 rooms and apartments to its accommodation stock.The development is positioned within a mixed-use precinct that includes access to the Boardwalk leisure complex, beachfront amenities and retail infrastructure, showing a growing trend toward integrated hospitality offerings aimed at leisure and business travellers.The project comes amid a sharp rebound in international tourism. South Africa recorded 10.5-million international arrivals in 2025, a 17.7% increase from 2024, surpassing prepandemic levels. Much of this growth has been driven by travellers from other African countries, which now account for the majority of inbound arrivals — the number of international tourists arriving in South Africa from other countries.The recovery has boosted employment in the tourism value chain, which remains a big contributor to the broader economy. Tourism accounts for nearly 9% of South Africa’s GDP and supports about 1.8-million direct and indirect jobs.The stronger demand environment is beginning to shift investment behaviour in the hospitality sector, with capital increasingly directed toward expanding accommodation capacity rather than only restoring pandemic-era losses.The increase in arrivals is beginning to translate into new accommodation investment, with developers expanding capacity in response to sustained demand growth.The Eastern Cape city is located in an established industrial corridor anchored by the Coega Special Economic Zone, as well as major investments such as the BAIC vehicle assembly plant and Aspen Pharmacare’s manufacturing operations.Also read: EDITORIAL | Good move by the IDCCapital Hotels Group CEO Marc Wachsberger said Gqeberha’s broader economic base makes it a viable long-term hospitality market, citing its role as a manufacturing and logistics hub supported by port activity and industrial development zones.The IDC, which has increasingly positioned tourism as part of its development finance mandate, has backed multiple hospitality projects in recent years. IDC head of services Kagisho Bapela said the sector remains central to job creation efforts, adding that cities like Gqeberha have the potential to strengthen their role as regional economic hubs.The Capital Gqeberha development marks the group’s 12th investment in South Africa and the IDC’s second partnership with the company, after the Capital Mbombela project launched in 2021.The project also forms part of a broader pipeline of tourism infrastructure investment. KwaZulu-Natal-based Club Med South Africa is expected to open in July, marking one of the largest resort developments in the country since Sun City and pointing to investment in leisure tourism.