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SA tourism 'must be realistic about growth'

Stellenbosch - The SA tourism industry must be realistic about its growth expectations, Minister of Tourism Derek Hanekom said on Friday.

"While the growth forecasts are positive, we must remain realistic about potential wild cards," he said at the annual conference of the SA Tourism Services Association (Satsa) taking place on the Spier wine estate near Stellenbosch.
 
"Fickle outbound growth from some regions, potential airlift disruptions due to the spread of epidemics as well as volatile and rising jet fuel prices come to mind."

While growth in tourism demand from emerging markets continues to be strong, the outbound growth from some of SA's traditional markets is also now showing more promising signs of recovery.

"This more balanced growth outlook from both emerging and traditional markets underscore that, as a destination, SA should continue to carefully manage its risks by balancing its focus on domestic, regional African and long-haul overseas source markets," Hanekom said.
 
In his view SA should invest in a portfolio of both mature and emerging markets.

Furthermore, domestic tourism flows could be moderated by high fuel prices and sluggish growth in disposable income.

"If we add to this the more value conscious post-recession consumer, shortening booking cycles and the trend towards the so-called 'staycations' and shorter trips, and intensifying rivalry between destinations to attract the lucrative millennial traveller segment – we do have our work cut out for us."
 
And then there are the disruptive business models emerging in the so-called sharing economy.

During the last 10 years, while global tourism expanded only 4.5% per year on average, the compound annual growth in SA's foreign arrivals was 9.3%.

Revenue and rates
 
Recently, Price Waterhouse Coopers reported that revenue from all accommodation categories combined rose 14% in 2013, on the back of solid growth in international arrivals, recovering occupancy rates and an increase of 8.4% in average room rates.

On the transport side the car rental industry experienced an increase of over 14% in rental days during the first five months of the new inbound season.

"But before I am charged with a one-sided analysis, let me immediately qualify this. I know that the strong performance at the top of the pyramid is not necessarily filtering through the whole value chain," said Hanekom.

The latest Tourism Business Council of SA (TBCSA) Tourism Business Index shows the tourism industry is feeling the pressure of rising input costs.
 
"Nevertheless, if we take a step back from the immediate pressures, we do have a healthy, growing and resilient industry," said Hanekom.

Challenges in the industry include, in his view, inconsistencies in land transport regulation between different provinces, backlogs in road infrastructure maintenance, airlift pricing and the lack of competition on some routes, visa regulations and travel facilitation and tourism safety issues.

Furthermore, transformation in the industry is important to him as it goes to the heart of shared growth.

"I am aware that some of you are eager to hear more about the envisaged changes to the B-BBEE codes," said Hanekom.

Last week, the national department started deliberations with TBCSA on the draft Tourism B-BBEE codes of good practice.

"These codes support our efforts to address the inherited skewed ownership of enterprises, facilitate greater management transformation and skills development and stimulate supplier development," said Hanekom.

Global picture

The United Nations World Tourism Organisation expects global growth in international tourist arrivals to consolidate at around 4% to 4.5% this year.

According to the International Air Transport Association, year-to-date air traffic growth is registering at approximately 6% growth over 2013 levels.

"In comparing this growth with the 3.4% global economic growth forecast by the IMF for 2014 it is clear that growth in the tourism economy is outpacing growth in the wider economy," said Hanekom.

- Fin24

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