31 August 2012

Cautious optimism as arrivals and occupancy levels improve

The prevailing mood among South Africa’s tourism business community is cautious optimism as the trading environment improves.

Mavuso Msimang, TBCSA chairman Mavuso Msimang, TBCSA chairperson

Despite 2011 having being a tough year, the resilience of South Africa’s travel and tourism industry – backed by the compelling value proposition of South Africa’s products and services – carried us through.

This was the message from Mavuso Msimang, Tourism Business Council of South Africa (TBCSA) chairperson, when he was speaking at a high-level industry/government leadership dialogue that took place at the Sheraton Hotel in Pretoria on 30 August 2012. 

Msimang said that despite 2011 having been a tough year with a difficult trading environment, the resilience of South Africa’s travel and tourism industry – backed by the compelling value proposition of South Africa’s products and services – had carried the industry through. 

He said there were a number of reasons to be optimistic. ‘Tourist arrival numbers are on the increase and the TBCSA FNB Tourism Business Index (TBI) revealed the continued positive performance in the tourism industry in the 1st quarter of 2012.’ 

The 1st quarter of 2012 saw a 10.5% increase in tourist arrivals to South Africa, or 216 031 more tourists, with overseas tourist arrivals increasing by 17,8%.

Although the TBI for the 2nd quarter showed a slight slowdown in business performance, Msimang said the TBCSA remained optimistic that the tourism industry was slowly on the path to recovery.

Tourism Minister Marthinus van Schalkwyk said that although many risks and uncertainties remained, it appeared that the South African tourism sector had turned a corner in respect of occupancies – 1 of the main reasons for the despondency among stakeholders last year.

Both Van Schalkwyk and Msimang said they were encouraged by the positive financial results of JSE-listed tourism companies like City Lodge and Sun International, achieved on the back of recovering occupancies and increased average daily room rates.  

But Van Schalkwyk also pointed out that pressures remained in many parts of South Africa’s tourism value chain.

Msimang warned that the continued rise in input cost was a pressure point for businesses and a reason to remain cautious. ‘Not only has this put a strain on operations, but it has also had a major impact on the consumer’s ability to travel.’ He cited further electricity tariff increases and the possible implementation of e-tolling in Gauteng as examples of these pressures.

He added that delays in implementation of the 'Univisa' (single visa) for Southern African Development Community countries and other barriers to entry for tourists needed to be addressed as a matter of urgency if South Africa hoped to increase its tourist arrivals market share.

Van Schalkwyk said meaningful progress had been made with respect to addressing the visa issues raised by the industry last year, although much more still had to be achieved. The new airlift strategy is also being finalised. ‘It will lay the foundation for better future alignment of South African Tourism and SAA’s market segmentation, and the Department of Transport’s airlift strategy and bilateral negotiations,’ he concluded.

He added that South Africa’s tourist arrivals figures confirmed that ‘spot-on’ decisions were made in the previous portfolio review when South Africa decided to establish a solid foothold and invest early in emerging markets.

‘In the first quarter of 2012, Brazil recorded year-on-year growth of more than 70% and India 23%. A measure of our success would be if some of these new ‘investment’ markets were to grow into "core" markets in years to come,’ he continued.