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Tourism Sector
Introduction
- Commonly known as the gateway to Africa, South Africa is currently
one the most sophisticated and promising players in the emerging markets
stable. Home to 6% of the continent's population, South Africa produces
approximately 18% of Africa's GDP and boasts 45% of its mineral production
and 50% of its purchasing power. All of this has led to the domestic
economy recording strong and consistent performances in the post-apartheid era.
- South Africa has experienced significant growth rates in the tourism
sector since 1994. Global rankings of top tourism destinations put South
Africa at 32nd position in 2005 in terms of absolute size. The South
African tourism industry shows average growth of 6 % over the past five
years, with steady increases in the number of long-haul visitors from
major foreign markets. Given the important economic role played by
tourism, the government's Accelerated and Shared Growth Initiative
for South Africa (AsgiSA) has identified tourism as an immediate
high-priority sector. Both government and the private sector look to
the tourism industry as a source of economic and employment growth.
Tourism is also a major source of tax revenue, and has stimulated
investment in infrastructure such as the new terminal at O. R. Tambo
International Airport, the Gautrain high speed link, and soccer stadiums
across the country in advance of the 2010 World Cup.
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Foreign Tourism in South Africa
- South Africa saw well over seven million foreign tourist arrivals in
2005 - a 10% increase on the previous year. The growth in the past 11
years was exceptional with tourism increasing by more than 100% since
1994. Tourism grew rapidly between 1994 and 1998 at a rate of 11.8%.
The country consolidated its performance between 1998 and 2001 and
then grew by 6.2% from 2001 to 2005.
Foreign Tourists Arrivals to South Africa (1994 - 2005)
Click on image to display larger version
Source: South African Tourism 2005 Annual Tourism Report
- Arrivals from Africa currently account for 72% of all foreign tourists
to South Africa, enhancing the view that SA serves as a gateway to the
continent. Strong growth rates can also be seen from major non-African
markets.
Click on image to display larger version
Source: South African Tourism 2005 Annual Tourism Report
- The most popular activity undertaken by foreign tourists was shopping,
followed by enjoying the night life and socialising.
Click on image to display larger version
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Domestic Tourism in South Africa
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Current Industry Composition
- Tourism in South Africa is characterised by the high number of small,
medium and micro players. As barriers are low, it is relatively easy
for an entrepreneur to open a bed and breakfast, or start a tour operating
company. These small enterprises are extremely valuable to the South Africa
tourism economy as they are able deliver a set of highly diverse and
customized experiences that larger enterprises find difficult to offer.
A key challenge to their sustainability lies in access to the market,
and access to skills and training to be able to deliver a quality experience.
- At a large corporate level, the SA tourism sector is dominated by
several key players. Avis, Imperial, Budget Rent a Car and Hertz are
the leading car hire companies. SAA is the most dominant carrier on
international air transport routes. Other than SAA, domestic airlines
are Nationwide, Comair, 1Time, Kulula.com and the recently launched
Mango Airlines. Southern Sun, Sun International, Protea hotels, City
Lodge group and SAN Parks own and manage the bulk of accommodation
supply, while the distribution channel is dominated by Tourvest/
Imperial Holdings (including Springbok Atlas), Bidvest and Cullinan
Holdings.
- However, tourism transactions go beyond this direct interaction with
tourists. A wide range of businesses such as restaurants, caterers,
launderers, and vehicle manufacturers, derive part of their income from
activities associated with the tourism industry. This wide spectrum
makes up the 'tourism economy' ensuring significant opportunities for
business within this sphere.
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Recent Highlights
- The highlight of investment in the tourism sector in 2006, has been
the sale of the Victoria & Alfred (V&A) Waterfront to a foreign consortium
for $1bn (R7bn). The purchasers formed a joint venture of Dubai-based
Istithmar and UK-based London & Regional Properties. The venture also
included a consortium consisting of a number of South African broad-based
black economic empowerment investors.
- The recent listing of IFA Hotels and Resorts (IFAHR) and the Hospitality
Property Fund on the Johannesburg Securities Exchange. This can be seen as
evidence of further investment in the premier hotel and leisure resort
segment in South Africa.
- Air travel has also been a significant mover with the entry of a third
low-cost domestic airline, Mango, to take advantage of the increasing
domestic air-travel market
- On the ground transport services front, 2005 saw Avis International
spend close to R1bn in purchasing approximately 8000 new passenger
vehicles in anticipation of increased rental demands.
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South African Tourism Investment Opportunities
- Hotels and self-catering holiday resorts
- Adventure, eco-, sport-, conference- and cultural tourism
- Infrastructure development
- Leisure complexes and mega resorts, especially in the coastal regions
- Harbour and waterfront developments
- Trans-frontier conservation areas
- Cruise liners and transportation
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Role of TISA Investment Promotion
- The Investment Promotion & Facilitation Unit of the dti - This unit
forms part of Trade and Investment South Africa (TISA), a division of
the dti primarily responsible for the attraction of inward investment
into South Africa.
- This is achieved by offering potential investors a point of call where
they can access a complete range of services: These include the provision
of information regarding the macro-economic position of South Africa, the
overall business environment, and the process of investing in the country,
as well as detailed sector-specific information.
- Investment is further facilitated by the unit through the provision of
assistance in organising visits or participating in events such as
exhibitions in South Africa and in expediting incentive applications,
work permits and other documentation required by investors. In addition
to such services offered to investors on an individual or collective
basis, the unit is also responsible for the packaging, promotion and
implementation of projects aimed at addressing identified investment
opportunities
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Contact
| Contact Person |
Mr Renai Moothilal
Assistant Director: Investment Promotion |
| Tel |
+27 (12) 394 1202 |
| Fax |
+27 (12) 394 2202 |
| Email |
Renaim@thedti.gov.za |
| |
| Contact Person |
Ms Elizabeth Mtshali
Assistant Director: Investment Information |
| Tel |
+27 (12) 394 1333 |
| Fax |
+27 (12) 394 2333 |
| Email |
Lizziem@thedti.gov.za |
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References
- the dti, (2005), Sector Development Strategy: Tourism
- the dti, (2006), Geared for Growth
- SA Tourism (2005), Annual Domestic Tourism Report
- SA Tourism (2005), Annual Tourism Report
- Independent research and analysis compiled by the dti's
Tourism Customised Sector Profile desk
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