Tourism’s potential: A boost worth billions of rand

Tourism minister Derek Hanekom doesn’t tire of spreading the news that South Africa managed to break above the 10m mark of annual inbound tourist traffic last year, reflecting a jump of 13% on the previous year. 

Citing the figures released by StatsSA, the minister noted at this year’s Meetings Africa indaba that overseas arrivals surged a “remarkable” 18%, to 2.5m, while the African continent was source of three-quarters of inbound traffic.

The next target appears to be 15m visitors, as Hanekom has said visitors can grow by 50% over the next five years. 

Travel has been identified as a major economic driver in SA and across the world, SA Tourism CEO Sisa Ntshona noted at the indaba. The event attracts government officials and captains of industry from around the globe. While sharing Ntshona’s sentiment, and citing the country’s potential and unique features,

Lulu King, a director at That Sales Lady, a consultancy, argues that SA is punching way below its weight. 

Her point is supported by figures from the World Travel & Tourism Council (WTTC), which show that the local industry lags African and global averages by way of economic impact given the size of the market – even though the local sector provides jobs (direct or indirectly) to 1.6m people (projected to grow by an average of 3.7% per annum until 2026), and contributes 9.5%, or R375.5bn, to GDP. 

In a roundabout way such numbers – pointing to SA’s relative underperformance – affirm Hanekom and King’s belief that, whatever the realistic targets, the country could register significant growth in the next few years.

In order to boost visitor numbers, the department of tourism has opened offices in Nigeria and elsewhere to raise awareness of this tourist destination and is wooing business travellers from Russia. Entry rules for Russians visiting SA for leisure purposes have also been relaxed. 

At the same time, additional visa facilitation centres have been opened in China and immigration processes there and in India have been eased. 

Tourism department spokesman Trevor Bloem believes these measures have buoyed incoming traffic. 

Revised rules saw the number of SA-bound Chinese tourists growing by 38% last year to hit 117 000, while 109 000 Australians visited SA. 

However, visitor numbers from these and many other overseas countries remain off the pre-2014 highs. Overall, the numbers have risen 5%, or 500 000 visitors, to current levels versus the 9.5m tallied in 2013, before new immigration rules took their toll on arrivals.

Growth potential

That Sales Lady’s King, however, reckons that “given our resources”, SA should aim for many more tourists. She argues the target ought to be no lower than 20m. 

“We’re undercutting our own market by billions by not building capacity. It’s all good to encourage people to build B&Bs, but who’s teaching owners how to run them, how to do marketing and sales?” she says, noting that the young African market, which is known to spend thousands on the finer things in life, remains largely untapped by South African tour operators. 

Meanwhile, Lagos-based events and tourism outfit Velox has shifted its focus from SA to Dubai and Kenya since the former remains “a difficult place” to visit for its clients, director Olalekan Badmus tells finweek.

Broadly, the total global outbound travel market, in other words tourists who travel outside their home countries, is estimated at 1.2bn per annum, according to the WTTC.

Who is visiting?

The latest figures reveal that the UK – albeit amid slight declines in the wake of its divorce from the EU – remains SA’s largest overseas market. Last year, it accounted for 18%, or almost 450 000, of inbound tourists from outside Africa.

“The spectacular growth in tourist arrivals indicates that the close collaboration between various government departments, between the department of tourism and industry, and between suppliers and service providers on the ground has paid off,” Hanekom said in a statement.

Examples include government’s approval of the Bidding Fund to improve the country’s share of global conferences, funding projects that, in turn, create thousands of jobs, and collaborating with industry players in improving and marketing SA as a tourist destination.

National Treasury has set aside R20m for the next financial year and R90m for the following three years for the Bidding Fund.

Hanekom sees business travel as yet another trump card given its impact and multiplier effects. “The estimated total direct spend of business tourists in South Africa was R42.4bn in 2015. This is big money – more than R40bn injected into our economy from one niche segment of tourism in a single year! And it is growing,” he said, citing a three-year study commissioned by the SA National Convention Bureau to determine the economic value of the business events industry.

Urging cooperation across different sectors and partnerships with foreign countries, Ntshona told the 2017 Meetings Africa attendees that the country was well-placed to achieve a bigger share of the global traveller due to an array of factors such as its world-class infrastructure and natural beauty.

It doesn’t hurt that Condé Nast, a well-respected magazine, ranked SA fourth on its Top 20 of countries to visit across the globe, beating well-liked destinations such as France, Morocco and Thailand in 2016. Cape Town owns bragging rights as the culinary capital of the world, according to that magazine.

The visa blunder

While unhappy with a 7% decline in inbound tourist traffic in 2015, Hanekom took solace from the length of stay and spend per foreign tourist increased – resulting in a R4bn year-on-year revenue growth, to a total of R68bn, in that year.

But 2015, when travellers ditched this market for other destinations in Africa and abroad even as the relatively weaker rand stood to boost traffic, seems distant.

The negativity started in 2014 following the on-and-off immigration and visa rules that involved presentation of biometric data in person and, even in cases of visa-exempted countries, unabridged certificates for all minors entering or leaving the country.

The administrative blunder cost the industry an average 1 600 tourists a day, as the situation worsened in 2015, according to consultancy Grant Thornton’s Lee-Ann Bac.

“A loss of this magnitude in foreign tourist arrivals is unprecedented,” she said, adding that although the economic impact of this fiasco would be difficult to determine, it cost the GDP billions of rand in unrealised income.

Tourism supports a range of other industries – from transport to retail, entertainment and telecommunications – meaning the ripple effects are extensive.

Looking at the current situation, Bac says the revised visa requirement measures stemmed the tide of losses. “There are still lingering matters such as the department of home affairs’ implemented visas for the New Zealand market earlier this year, which has played havoc in this market,” she says, adding that early signs suggest that 2017 will be no bumper year.

The point is that a great deal of work needs to be done before the country sees its fair share of inbound traffic.

This is a shortened version of the cover story that originally appeared in the 23 March edition of finweek. You can find the rest of the article, including shares views, in the magazine, which you can buy and download here.