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20 July 2012

TBI dipped in Q2, but Q3 outlook positive

The recently released TBCSA FNB Tourism Business Index showed difficult trading conditions for tourism businesses in the 2nd quarter of 2012, but an improved outlook in the next quarter.

Gillian Saunders, principal at Grant Thornton Gillian Saunders, principal at Grant Thornton

It seems that after almost 2 years of very tough conditions, tourism businesses are close to trading at normal levels again. - Gillian Saunders, partner at Grant Thornton

South Africa’s tourism industry performance was dampened in the last quarter by economic pressure in key source markets, says Mmatšatši Ramawela, CEO of the Tourism Business Council of South Africa (TBCSA).

Ramawela was commenting on the released 2nd quarter Tourism Business Index (TBI).

The TBI registered an actual performance of 88.2 in the 2nd quarter of the year – a 13.7 index point decrease from the 1st quarter’s actual performance of 101.9. This indicates difficult trading conditions for business in this period.

The winter season is acknowledged to be the most challenging for the industry with greatly reduced leisure travel and an increased dependency on local business travel.

Insufficient international and domestic leisure demand, insufficient domestic business demand, and the cost of input remained issues of major concern within the industry.

Gillian Saunders, partner at Grant Thornton, which compiles the Tourism Business Index for the TBCSA, said it was not surprising that business travel had not been able to take up the available capacity. This was due to the downward trend in both general business confidence indices: FNB’s Bureau for Economic Research (FNB BER), and the South African Chamber of Commerce and Industry’s Business Confidence Index (SACCI BCI).

On a positive note, she pointed out that, other than Q1 2012, 88.2 was the highest actual performance registered since mid-2010 when the FIFA World CupTM impact was felt.

‘Even more encouraging is that the tourism industry outlook for the next quarter is at the highest it has ever been, at 99.8 - when 100 represents normal business levels. It seems that after almost 2 years of very tough conditions, tourism businesses are close to trading at normal levels again,’ she said.

There is also a positive outlook on employment creation in the next quarter. Only 3.9% of accommodation businesses expect to decrease employment compared with 25,3% a year ago. And 7,4% of other businesses in the tourism value chain expect to increase employment in the next quarter.  

Ramawela said it was heartening to see a somewhat positive outlook emerging on the retention of staff and future employment levels in the industry.

She added that the TBI report was a perfect precursor to the forthcoming South African Travel and Tourism Industry Conference (SATTIC) in September. ‘Through the TBI, we can clearly identify some of the key challenges to growing travel into and within South Africa. Finding possible solutions to overcome these challenges is the underlying theme for the SATTIC conference. We urge all travel and tourism operators to attend and be part of the solution,’ she concluded.