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Inbound Demand Lifts SA Tourism

Strong Overseas Leisure Demand Lifts SA’s Tourism Performance

The first quarter results of the TBCSA FNB Tourism Business Index (TBI) point to the weak exchange rate and strong overseas leisure demand playing a significantly positive role in lifting business performance. By Kagiso Mosue.

The South African travel industry recorded an overall index of 112.4 in this quarter, slightly lower than last quarter’s 114.6, but still above normal trading performance levels.

Respondents to the quarterly index, a flagship project of the Tourism Business Council of South Africa (TBCSA) compiled by Grant Thornton, also highlighted improved marketing and positive media coverage as contributing factors.

TBCSA CEO, Mmatšatši Ramawela welcomed the results, saying that some of the industry’s good performance can be attributed to improved economic conditions in the global environment, as well as current efforts to promote the destination in new source markets. “Over the past two years, we’ve seen constrained overseas leisure demand, particularly from our traditional source markets such as the United Kingdom. We are encouraged to see a rebound in the market but also recognise that there is growing demand for both leisure and business travel in emerging markets within regional Africa and the BRIC countries.”

TBI comprises of two sub-indices: accommodation, which caters for the various types of accommodation establishments from guest-houses to hotels, and other tourism businesses which includes the tourism transport sector, travel agents, retail outlets, conference venues, attractions and forex traders.

The accommodation sector performed slightly better than expected with an index of 116,1 compared to the forecasted index of 107,3. Notably this is the sector’s second highest recorded performance level achieved since TBI’s inception in 2010. The highest recorded performance level was reached in Q1 2013 when the index peaked at 120.9. Expectations for the second quarter of the year remain close to normal at 103,2 with an anticipated strong positive performance forecast for self-catering & camping, timeshare and hotel establishments.

Other tourism businesses, experienced a slightly weaker performance of 109,6 – with travel agents recording a significantly worse than normal performance. However, operators in this sector remain fairly optimistic going into the next quarter.

Head of Advisory Services at Grant Thornton, Gillian Saunders adds that in this quarter the index survey included questions on the likely impact of the forthcoming national elections on business. “When taking into account both the accommodation and other tourism businesses, more than half (56,3%) of respondents are of the opinion that the elections will not have an impact on business, with some citing the possibility of an increase in leisure demand as an implication of the voting day being declared a public holiday.

However, with 37% expecting a negative impact from the elections, on balance the industry is -30.1% negative in expecting that the elections will have a negative impact on business performance. The extra mid-week public holiday disrupting business travel and people not travelling in order to be able to vote at their voting stations are cited as impacts.” In closing, Ramawela said the organisation was pleased to see that business performance in the sector remained buoyant and was responding well with the rebound in international travel demand. “Now that the Easter holidays and the election weekend are upon us, we hope to see positive performance from the domestic leisure market in the second quarter”, she said.

The report can be downloaded HERE.

About the Author
Kagiso Mosue is the Corporate Communications Manager at the Tourism Business Council of South Africa.

About Tourism Business Index (TBI)
TBI is an overall indicator of the “health” of businesses trading in the tourism sector. This is a business tool that can assist particularly independent and small businesses to understand their operating environment, while large businesses are able to use the index to interact with their various stakeholders. Visit www.tbcsa.travel to download all index reports.

About TBCSA
Tourism Business Council of South Africa (TBCSA) is a member-based organisation, made up of Tourism Associations as well as leading businesses operating in the Travel and Tourism sector. The Council seeks to ensure that the industry is unified and speaks with one voice when engaging relevant stakeholders on macro-economic issues affecting the sector.

About Grant Thornton South Africa
Grant Thornton South Africa is a member firm of Grant Thornton International Ltd (GTIL). Grant Thornton South Africa was founded in 1920 (previously Kessel Feinstein). We are leaders in our chosen market, providing assurance, tax and specialist business advice to dynamic organisations – listed companies, large privately held businesses and private equity backed organisations. In addition, public sector professionals from Grant Thornton are dedicated to providing specialised advisory services to government at all levels. Visit www.gt.co.za for more information.