Accomodation performance well below normal
Delving deeper into the performance of the two main TBI categories – ‘accommodation’ and ‘other tourism businesses’ – actual business performance for the Accommodation sector came in well below normal levels and notably lower than expected with an index of 79.1, compared to the anticipated index of 89.3. Looking ahead, the accommodation sector expects performance levels to decline further to an index of 66.1 – the lowest level of anticipated performance for the sector since the start of the Tourism Business Index project in 2010.
Oter tourism businesses category sees decline but is forecast to improve
In the other tourism businesses category, overall business performance also declined to an index of 85.5. However, this is forecast to improve in the second half of 2017 to an index of 91.4. This reflects a below average, but a slightly more optimistic outlook for a segment of the industry that comprises amongst others tour operators, coach operators, vehicle rental companies, airlines, travel agents, retail outlets, forex traders, conference venues, and attractions.
Factors driving decline in performance
Insufficient overseas leisure demand, insufficient domestic business demand and increases in competitive supply are the top three factors cited as contributing negatively to performance. Other reasons cited include the downturn in the economy, increases in rates and taxes and continued water restrictions.
The latest TBI results also correlate with the findings of other industry-specific reports released by Statistics South Africa, such as the tourist arrival figures (looking at a six-month overview) as well as the recently released 2016 Domestic Tourism Survey.
Not all doom and gloom
“Notwithstanding the decline we see in tourism business performance, it is not all doom and gloom, as is evidenced by the TBI’s reference to factors that are expected to contribute positively to tourism business performance in the remainder of the year,” says Ramawela. Amongst the positive factors cited is the possible increase in domestic leisure demand, as well as tourist demand generated through conferences and events across the region.
Industry requires an enabling business environment
Gillian Saunders, deputy CEO and head advisory services at Grant Thornton South Africa, says the industry is ready to re-align with a renewed sense of purpose, as it believes and understands the opportunity that the industry still offers but, at the same time, requires policy-makers to deliver an enabling business environment. “Despite the bleak outlook for the remainder of the year, our travel and tourism industry is more than ready, willing and able to play a major role in boosting the country’s economic growth – but it requires an enabling socio-economic and political environment.”
A timely topic of conversation for the industry to engage with government, as the country marks Tourism and Heritage Month during September.
Ramawela adds: “The decline we have experienced recently in business performance has the potential to be temporary if the sector, as a collective unit, takes up the challenge to address the underlying socio-political and economic issues that are affecting business and consumer confidence at a broader level.
“What we do for the country, we do for tourism. Conversely, what we do for tourism, we do for the country. Travel and tourism stand to benefit from government providing a conducive operating environment, and affecting economic policies and strategies that will position destination South Africa on a competitive path. In turn, improved tourism business performance will draw more investment and create much-needed jobs. It is in our hands to leverage the opportunities before us and work to position the industry as a key driving force for South Africa’s economic recovery,” she concludes.