Can South Africa Sus­tain Tourism Growth?

Tourism Tattler - - EDITORIAL - By Lee-Anne Bac.

While South Africa’s 12.8% in­crease in the num­ber of overnight tourists recorded dur­ing 2016 com­pared to those recorded dur­ing 2015 is laud­able, fur­ther anal­y­sis of the data re­veals there’s still sig­nif­i­cant work to be done to en­sure long-term, sus­tain­able and successful tourism growth.

Look­ing at Statis­tics South Africa’s re­lease of Tourism and Mi­gra­tion find­ings for 2016, the 10.04 mil­lion overnight tourists that vis­ited our coun­try is cer­tainly im­pres­sive and it’s a good step in the right di­rec­tion.

Of the 10 mil­lion overnight tourists, 2.5 mil­lion were from over­seas and the bal­ance, 7.5 mil­lion, came from Africa. The num­ber of over­seas tourists grew by an im­pres­sive 18% com­pared to 2015 while African ar­rivals, which com­prises the lion’s share of tourists recorded dur­ing 2016, grew by 11%.

But these fig­ures need to be re­viewed in con­text so that a more re­al­is­tic pic­ture of South Africa’s per­for­mance in the tourism in­dus­try can be as­sessed.

It’s im­por­tant to prop­erly con­sider the de­cline of nearly 7% of overnight tourists which we recorded dur­ing 2015 com­pared to 2014, with over­seas tourists down by nearly 5% dur­ing that year.

When analysing tourist ar­rivals to South Africa, the com­pound growth fig­ures are very im­por­tant. In re­al­ity, our na­tion’s com­pound growth in tourist ar­rivals over the past four years, be­tween 2012 and 2016, is only 3.9% per an­num, which is be­low the long-term world­wide av­er­age for in­ter­na­tional tourism ar­rivals which is be­tween 4%-4.5%. For­tu­nately, our com­pound growth for over­seas tourist ar­rivals dur­ing that same pe­riod is higher at 4.8%, but this is still re­garded as a slow, pedes­trian growth fig­ure.

2016’s growth did well to ‘right-size’ the poor growth recorded in prior years when South Africa’s tourism sec­tor was per­form­ing sig­nif­i­cantly be­low the global av­er­age.

The red flags in South Africa’s bumper 2016 year of tourism

The 2016 tourism data high­lights that three of South Africa’s key tar­get mar­kets did not per­form con­sis­tently over the course of the year. In­flu­enced by the Brexit de­ci­sion mid-year and by the Rand’s strength to­wards the end of the year, the United King­dom, which is the coun­try’s largest over­seas source market, only grew by 9,9% for the year in 2016.

China – al­though achiev­ing ex­cel­lent growth over­all for the year at 38%, in the last quar­ter this market was ac­tu­ally in de­cline (-2%). This was prob­a­bly as a re­sult of South Africa’s sig­nif­i­cant growth in the last quar­ter of 2015 which was dif­fi­cult to match in the fi­nal three months of 2016.

Sim­i­larly, de­mand from In­dia showed an­nual growth of nearly 22%, de­spite only record­ing a 7% growth in the last quar­ter of the 2016 year.

The key ques­tion, when look­ing ahead is whether 18% growth in over­seas tourist ar­rivals is sus­tain­able, par­tic­u­larly now that our ZAR Cur­rency has strength­ened. When we look at the fi­nal two months of 2016, un­for­tu­nately it doesn’t look like this rate of growth is go­ing to be pos­si­ble.

The tourism data high­lights that over­seas tourist ar­rivals only in­creased by 13% dur­ing Novem­ber and by 11 % in De­cem­ber last year.

Ev­i­dence from last year’s data in­di­cates that 2017 is un­likely to see sig­nif­i­cant growth in tourist ar­rivals and South Africa is likely to fall back to av­er­age lev­els of growth (around 4% to 5%).

How­ever, there are al­ter­na­tive cir­cum­stances which may pos­i­tively im­pact 2017’s tourism growth:

1. South Africa’s ZAR cur­rency once again weak­ens against ma­jor global cur­ren­cies; and/or

2. Com­pet­i­tive coun­tries are no longer at­trac­tive as tourist des­ti­na­tions; and/or

3. Some­thing truly dra­matic and dif­fer­ent is put into ac­tion in or­der to at­tract tourists to South Africa.

Only the third point above is within our own con­trol. We need to in­vest in tourism, just like in any other in­dus­try, to make sure that the num­ber of ar­rivals in­crease sig­nif­i­cantly and hence add real value to our cit­i­zen econ­omy for the ben­e­fit of our peo­ple in the form of jobs and busi­ness ac­tiv­ity.

About the author: Lee-Anne Bac is a Di­rec­tor at Ad­vi­sory Ser­vices for Grant Thorn­ton South Africa. www.gt.co.za

Def­i­ni­tions:

A tourist is de­fined as an overnight, for­eign vis­i­tor, and ex­cludes same-day trav­ellers, tran­sit trav­ellers and work seek­ers.

When ref­er­ence is made to a trav­eller, this would be for­eign tourists PLUS same-day trav­ellers, tran­sit trav­ellers and work seek­ers An over­seas tourist is a vis­i­tor who is a cit­i­zen of a coun­try out­side of Africa.

An African tourist is a vis­i­tor to SA with cit­i­zen­ship of an African coun­try African Air-Ar­rival tourists are African tourists who en­ter SA via an air­port (and not across land-bor­ders).

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