South Africa’s tourism sector set for steady growth

pwcSouth Africa’s hotel industry is set for steady growth in the next five years driven by an increase in the number of foreign visitors into the African continent.

Pietro Calicchio, Industry leader of Hospitality & Gambling, PwC Southern Africa (www.PwC.com), says: “Although the South African economy has weakened considerably, the overall outlook for hotels in South Africa is expected to remain positive.”

According to PwC’s 6th edition Hotels Outlook 2016 – 2020, revenue from hotel room accommodation in South Africa rose 8.1% in 2015 to R14.2 billion, reflecting an increase in stay unit nights and a 6.5% rise in the average room rate. Overall, hotel room revenue is projected to expand at a 7.8% compound annual rate to R20.6 billion in 2020. PwC’s report features information about hotel accommodation in South Africa, Nigeria, Mauritius, Kenya, and Tanzania.

“The devaluation of the rand and the relaxation of certain visa regulations has had a positive impact on the tourism industry in South Africa, making the country a more attractive tourism destination. This has also had a positive impact on the number of foreign visitors to South Africa over the past six months,” says Calicchio.

The new visa regulations had a sharp impact on the South African tourism industry. After growing at an 8% compound annual rate between 2009 and 2013, the number of foreign overnight visitors rose only 0.2% in 2014 before falling 6.8% in 2015 – the biggest decline in six years, according to official statistics.

China had the largest decrease of 46% in 2014, while the decrease from India was 23.5%. Visits from China edged up 2.2% in 2015, but remained 45% lower than the peak in 2013, while visits from India fell an additional 8.5% in 2015 for a cumulative 30% decline over the past two years.

A key factor cited as contributing to the decline was the requirement that foreign travellers appear in person at South African embassies to have their biometric information taken. However, some countries such as India, Russia and China have very few South African visa processing centres.

In October 2015, some of these regulations were eased and the Department of Home Affairs is considering introducing further amendments.

Overall, in 2015 there was a decline in the number of foreign travellers to South Africa from every region except the Middle East and North Africa. Of non-African countries, the UK is still the largest source of visitors to South Africa at 407 486 in 2015, an increase of 1.4%. It was one of the few countries from where visitors increased in 2015, but that gain did not offset the overall 6.8% decline from 2014. Visits from the US dipped below 300 000 in 2015, down 3.9% from 2014. Germany was down 6.5% in 2015, while Australia fell 10.8%.

Of African countries, the largest numbers of foreign visitors to South Africa in 2015 came from Zimbabwe (2.1 million), followed by Lesotho (1.5 million) and Mozambique (1.3 million) but all were lower than in 2014.

On a more positive note, the number of monthly overnight tourist visitors to South Africa started picking up towards the end of 2015 and rose above the one million mark for the first time in January 2016, with international visitor numbers up by 16.8% for the months of January to April 2016 when compared to the same period in 2015. Visitor numbers from Europe have increased by 13.6%, China 38.0% and North America 16.4% through to April 2016 when compared to the first four months of 2015. For 2016 as a whole, a 12.4% increase in foreign visitors is anticipated.

Source = PricewaterhouseCoopers
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