SA's tourism business performance dips

SA's tourism business performance dips

2014-07-15 15:28

Pretoria - SA’s tourism business performance dipped in the second quarter of this year according to the Tourism Business Council of SA (TBCSA) and FNB Tourism Business Index (TBI) released this week.

The latest report showed a score of 94.7 across April, May and June, indicating performance just below normal, and almost 18 points below January to March’s 112.4 index reading.

The industry had already shown an expectation of a dip with a projected 103 performance, but actual performance was somewhat worse than expected at 94.7. Expectations for the third quarter are at about the same level at 98.

A score of 100 is regarded as the normal trading climate. The lower reading emanated mainly from the "other tourism" business segment (excluding accommodation), which includes travel agents, transport operators and conference centres.

Meanwhile the accommodation sector still performed better than normal achieving an index of 105,8, although it is down from the 116.1 score which was registered in the first quarter, but slightly ahead of the forecast performance index of 103.

The numbers come off the back of the TBCSA’s annual general meeting last week, where newly appointed Minister of Tourism Derek Hanekom met with the travel and tourism trade.

He lauded the private sector’s contribution to the growth of the industry over the years, but stressed the need to ensure that the growth was inclusive and contributed towards addressing the challenges of inequality and poverty in the country.

The TBCSA welcomed Hanekom’s views, but it remained concerned about various factors which continue to bar sustainable growth.

"The biggest challenge facing many tourism businesses remains the rising cost of doing business, which can also be attributed to government legislation, regulations and input costs as 44% of TBI respondents cited," said TBCSA CEO Mmatsatsi Ramawela.

"Insufficient domestic and international leisure demand, especially from South Africa’s key source markets, also featured heavily as constraints on performance."

Businesses, which fall under the "other tourism" segment, are also affected by threats of a struggling economy.

On the positive side, employment level expectation for the next quarter is an encouraging balance at +2.8% and +8.6% for accommodation and "other tourism" businesses respectively. This indicates some very modest growth in employment.

Hanekom identified job creation in the industry as a key priority.

"This is especially welcomed after the accommodation sector’s -49,7% negative outlook on balance for employment growth in the second quarter. It indicates a re-stabilisation of employment levels after what appears to have been major restructuring," said Gillian Saunders, head of advisory services at Grant Thornton.

"Going forward, no doubt the industry will continue to grow employment as it maintains reasonable overall performance levels".

Overall, both the accommodation sector and other tourism businesses have a positive outlook of on balance +5.1% and +20% respectively when considering the year ahead.

In comparison, the RMB/BER Index, which represents general business confidence, has continued to remain low, recording 41 index points for both the first and second quarter of 2014.

Tourism businesses remain slightly ahead of this in performance, still indicating more buoyancy than the economy generally.

More encouraging is that tourism businesses are hoping to beat the negative curve across the rest of the year.

"Essentially, the tourism business index is telling us that the improved trading conditions in the tourism sector have receded somewhat and that challenges remain, but the fundamentals for tourism are still good," said Ramawela concluded.

  • Craig Seaton - 2014-07-15 15:56

    Wait for the child unabridged birth certificate rule to start then watch the dip

      Justin Pretorius - 2014-07-15 16:00

      Apparently the number of Chinese tourists are dropping since May thanks to the regime's half-baked immigration laws. We will all suffer in the end

  • Andrea Broekhuizen - 2014-07-15 16:10

    Well my colleague whom I sent to S.Africa with stories of how fantastic it is wont be back after spending an hour under her bed whilst a shootout raged outside her hotel window...

  • Leonard Rom - 2014-07-15 16:16

    crime out of control and too expensive south africa

  • Louise-Roger Higham - 2014-07-15 17:43

    Control the crime and corruption and we may get them back

  • Erney Breytenbach - 2014-07-15 23:31

    Living abroad, I visit South Africa fairly regularly for holidays and stay in my house. On a couple of my last visits, I sat next to foreign tourists on my flight to Cape Town. A Dutch, German and Irish tourist have on different occasions said to me, been to S.A. before, that over the last 5+ years South African has become very expensive from what it use to be. Especially when it comes to food, clothing & accommodation. They are right. I can see how prices (food, clothing & accommodation)rises every year without taking inflation into account. It will be sad for tourism if the "regulars" stop coming because of constant price increases. They will be start looking at Central & West Africa, rather than South Africa, for an African experience.

      Stephanie Sutherland - 2014-07-16 07:36

      Agree, I just pass through and stay at mates and so on, but head off to Namibia and up to Masai country rather than having to deal with the crap in SA....

  • Dawie Barnard - 2014-07-16 06:22

    Hanekom vomits up this drivel about job creation etc, but government does their best to damage the sector by encouraging crime to flourish, ridiculous visa laws and progressive decay of infrastructure. Add to that so called "game rangers" driving into elephants in Kruger and ignoring attacks on tourists so as not to upset the voters pool. And tourists will flock toSA in droves? The white European worship of SA is fading now and people no longer look at the country through rainbow coloured glasses.

  • Stephanie Sutherland - 2014-07-16 07:31

    I have a friend there currently on an exchange program, but they are not allowed to go anywhere near a city only stay in the compounds and have security with them at all times. The other group have cancelled their tour, because of escalating violence against tourists in particular. It is still going to get pretty tough in that industry there.

  • painted.canvas.9 - 2014-07-16 09:58

    Domestic tourism will continue to decline as our economy "tanks". Our international crime exposure deters potential tourists. New immigration regulations are just another nail in the tourism coffin.

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