The South African tourism industry is poised for a robust recovery, with expectations of surpassing pre-pandemic levels in the latter half of 2023, according to the Tourism Business Index (TBI), an initiative of the Tourism Business Council of South Africa (TBCSA) and compiled by advisory firm BDO.
This promising outlook was unveiled during the TBCSA Tourism Leadership Conference held in Sun City from 6-8 September 2023.
Africa market behind ‘above-normal’ projections for SA tourism
The TBI offers valuable insights into the current and anticipated future performance of various tourism sub-sectors, encompassing accommodation providers, tour operators, vehicle rental companies, airlines, travel agents, retail outlets, forex traders, conference venues, and attractions.
The index assesses industry health on a scale from 0 to 100, with 100 representing the acceptable business performance level aligned with realistic long-term averages.
During the first half of 2023, the industry faced challenges, registering a ‘below-normal’ score of 76 on the TBI.
This dip in performance was primarily attributed to energy-related issues, particularly loadshedding. Among the hardest-hit sectors, the accommodation industry felt the brunt, grappling with high input costs driven by loadshedding and inflation.
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However, the outlook for the latter half of 2023, spanning from July to August, is significantly brighter, with an expected ‘above-normal’ performance, forecasting a score of 101.
Tshifhiwa Tshivhengwa, CEO of TBCSA, noted that the strong recovery projections were mainly driven by the African market. Still, the recovery of high-spending overseas markets lagged behind by 14% compared to 2019 levels.
Here are some of the key findings from the TBI survey
Tshivhengwa highlighted the importance of the overseas market’s recovery, emphasising its significant impact on tourism receipts and the industry’s capacity to regain jobs lost during the COVID-19 pandemic.
Despite skill shortages, 32% of surveyed accommodation sector businesses anticipate increasing their workforce during H2 2023. Additionally, 53% of other tourism businesses also expect to expand their staff.
To expedite the industry’s recovery, particularly in overseas markets, tourism stakeholders have stressed the need for substantial investment in destination marketing in key source markets and addressing concerns related to safety and security.
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Key Findings:
- Actual business performance for the consolidated accommodation sector in H1 2023 remained challenging with an index score of 58.4, lower than the corresponding period in 2019 (67.9). However, the forecast index for H2 2023 is more encouraging at 95.7.
- Other tourism businesses recorded stronger business levels relative to the accommodation sector, scoring 100.7, indicating that these sub-sectors operated at normal levels in H1 2023. A forecast index of 108.5 is anticipated for H2 2023.
- The cost of alternative power supply was identified as a significant concern, with 59% of surveyed accommodation businesses and 31% of other tourism businesses citing it as a major issue.
- Positive factors influencing the outlook for H2 2023 included improved operational efficiencies, strong overseas and domestic leisure demand, and the weak Rand exchange rate.
As South Africa’s tourism industry continues its path to recovery, careful attention to these factors and investments in key areas will be instrumental in realising the anticipated ‘better than normal’ performance in the coming months.
