South Africa: Tourism rising above challenges

The local tourism industry is expanding far faster than the rest of the economy, with visitor numbers on the rise and investment levels increasing, though it still has to combat negative perceptions of cost and security that dampen South Africa’s popularity as a holiday destination.

According to a report issued by the World Travel & Tourism Council (WTTC) at the end of February, the total contribution of the industry to the economy last year – taking into account both direct revenue and indirect factors such as state spending on tourism related infrastructure and support, the supply and purchase of goods and services, transport, information technology and utilities – came to $34bn, just under 10% of GDP. The report predicted that tourism’s input would rise by 1.9% this year but average 4.5% growth through to 2023.

The 2012 figure puts tourism’s total contribution to the economy roughly on par with that of the direct input of the mining industry, which was around 9% of GDP in 2011, according to the Chamber of Mines, though tourism creates far more direct employment – some 620,000 jobs in 2012 – compared to the minerals sector, which provides work for some 500,000 South Africans.

The sector also attracted investments of $5.6bn last year, with capital inflows to the industry estimated to rise incrementally over the long-term, at around 3.5% year on year over the next decade.

However, the actual figures may surpass the WTTC forecasts if last year’s trends in the tourism sector are maintained into 2013. According to data issued by the Department of Tourism on April 16, South Africa welcomed 8.3m overseas tourists – those from non-African countries – in the first 11 months of 2012. This represented a growth rate of some 16% year-on-year, four times the global average.

While well entrenched, a recent report by the World Economic Forum (WEF) did warn there were some threats to South Africa’s position, though the survey did find the tourism sector well dug in. In its Travel and Tourism Competitiveness Index for 2013, the WEF ranked South Africa 64th globally and third in Africa for travel and tourism competitiveness, two rungs up since the forum’s previous survey in 2011.

The report praised the government’s commitment to backing the industry, both through direct support and in improving ease of doing business in the sector by establishing an efficient regulatory regime and putting in place a liberal visa system.

“Indeed, tourism continues to be one of the five priority sectors in the country’s growth plan, and the government has reviewed tourism legislation in an effort to streamline it further,” the report said.

However, while the WEF gave South Africa high marks for its natural resources and stringency of environmental protection and air transport links, it fared less well when it came to matters of security, with the country being ranked 117th out of 140, and 130th in terms of the costs of crime and violence to business. The report also found that South Africa was losing some of its cost effective edge over a number of its rivals.

“Additionally, this year South Africa has experienced an increase in fuel prices, ticket taxes and airport charges, which have diminished its price competitiveness,” the survey found.

The WEF is not alone in identifying safety issues as a drawback for the industry. Concerns over security are a major factor in deterring travellers, who will be far less likely to travel if they lack confidence in the social, political and economic foundations of the destinations they want to visit, according to Mariette du Toit-Helmbold, the head of Cape Town Tourism, the city’s official tourism marketing agency.

“Crime and safety is one major concern of potential visitors,” du Toit-Helmbold told OBG. “We can assist in alleviating these concerns by distributing safety tips and helpful hints on safety in Cape Town as well as true and relevant stats on crime in SA when opportunities arise, which we do. Also, being transparent with regard to information on safety forums and decisions taken to prevent crime against tourists is helpful.”

The increasing levels of revenue and arrivals suggest, however, that few foreign tourists have been put off from visiting South Africa so far.