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 A tourisms good run looks set to last

 

 There are no signs that the gravity-defying performance of the South African tourism is likely to subside any time soon, says Anton Roelofse, regional general manager of Business Partners Limited (BUSINESS/PARTNERS).

Neither the stagnant local economy of less than 1 percent growth, nor a sluggish global economy of less than 3 percent growth, nor even the bureaucratic hurdles imposed for a while by the Department of Home Affairs on international travel have kept the thriving sector from producing a whopping 10 percent year on year growth.

“With such a performance, who would want to be in any other sector?” says Roelofse, who believes the fundamentals for a long-term tourism growth run are in place.

Firstly, the renown of South Africa’s tourist attractions is by now entrenched globally, including that of the country’s nature reserves, unique regions such as the Cape winelands, cultural riches, and niche offerings such medical tourism.

South Africa boasts world-class infrastructure fit for tourism – excellent airports, good roads, a well-developed accommodation sector and an exciting and growing array of tourism offerings, from helicopter rides to shark spotting.

Huge emerging economies, including India and China, have reached a stage where large numbers of people are starting to look outward for spending their increasing disposable income. The number of visitors from China, for example, has grown by no less than 50% in the last year, albeit off a low base. Even countries such as Saudi Arabia are sending increasing numbers of tourists to South Africa.

Meanwhile, South Africa’s traditional tourist wellsprings are still showing strong growth in numbers – 18% more Americans visited South Africa than the year before, 13.7% more British and 21% more Germans. World travel continues to become cheaper, not only with the current low oil prices, but also through infrastructure and technological development that make travel more efficient.

Shorter-term trends, even those that may at first glance seem negative, are also boosting South African tourism. The fall of the rand has made the South African tourism experience even more of a bargain.

“Who would have thought that, with the ructions elsewhere such as terror attacks in Europe, South Africa is starting to seem relatively safe?” says Roelofse. He believes that despite local political controversies, the recent municipal elections point to a long-term stability that can only be good for tourism.

The British exit from the European Union poses one of the few threats to local tourism, because Britain remains South Africa’s greatest tourism market, and a serious knock to that country’s economy is bound to impact locally. But the effects of Brexit are far from certain and will probably be overshadowed by the continued recovery of the local economy, even if it remains slow.

What about the dangers inherent in any boom, such as over-supply or over-pricing?

Roelofse says South African tourist businesses seem to have learnt their lesson from the previous boom just before and after the 2010 soccer World Cup when the craze led to a glut of tourist accommodation, and the industry, especially Cape Town, was criticised for pricing itself out of the market.

This time it is different, says Roelofse. The growth of the industry is not based on any short-term opportunity such as the World Cup, and the supply levels are realistic and based on the steady growth in tourist numbers. Accommodation levels are healthy and there seems to be the kind of price restraint that points to higher levels of experience and maturity in the industry.

In fact, supply will probably have to grow if the full potential of South African tourism is to be realised, and there is lots of room for innovation, especially when it comes to adventure tourism.

The main internal factor that keeps the local industry from growing is lack of capital, says Roelofse. BUSINESS/PARTNERS is keen to fund new tourism businesses, but the models show that accommodation based businesses such as guest houses require an own contribution to capital of at least 50% to be viable. However, Roelofse points to many tourism-based opportunities that are less capital intensive, for example businesses that put together tour packages.

The industry still has some way to go to learn how to “up-sell” so that each tourist who arrives spends more – and enjoys South Africa so much more. And there can never be enough staff training with the emphasis on better quality service, he says

Already one out of every 25 jobs in South Africa is rooted in the tourism industry. If current trends continue, tourism is set to become one of the biggest job-creation forces in South Africa

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