Tourism Trends 2014
SA’s tourism business performance dipped in the second quarter of 2014 according to the Tourism Business Council of SA’s FNB Tourism Business Index (TBI) released on the 17th of July.
The latest report showed a score of 94.7 across the 2nd quarter, indicating performance just below normal, and almost 18 points below the 1st quarter’s 112.4 index reading. The industry seems to have prepared for a dip, but actual performance was somewhat worse than expected. Expectations for quarter 3 are at about the same level at 98.
The quarterly index is a flagship project of the Tourism Business Council of South Africa (TBCSA) compiled by Grant Thornton. TBI tourism sectors assessed are:
- Accommodation which caters for the various types of accommodation establishments from guest-houses to hotels and
- Other tourism businesses which includes the tourism transport sector, travel agents, retail outlets, conference venues, attractions and forex traders.
A score of 100 is regarded as the normal trading climate. South Africa’s lower reading emanated mainly from the ‘Other Tourism’ business segment, which achieved a score of 86.2 points only.
Meanwhile the accommodation sector still performed better than normal achieving an index of 105,8; although it is down from the 116.1 score which was registered in the first quarter, but slightly ahead of the forecast performance index of 103.
“The biggest challenge facing many tourism businesses remains the rising cost of doing business which can also be attributed to government legislation, regulations and input costs as 44% of TBI respondents cited. Insufficient domestic and international leisure demand, especially from South Africa’s key source markets also featured heavily as constraints on performance” says TBCSA CEO Mmatšatši Ramawela.
Businesses that fall under the ‘Other Tourism’ segment are also affected by threats of a struggling economy.
A promising outlook
On the positive side, both the accommodation sector and other tourism businesses have a positive outlook of on balance +5.1% and +20% respectively when considering the year ahead.
Tourism businesses remain slightly ahead of the country’s growth rate, still indicating more buoyancy than the economy in general. More encouraging is that tourism businesses are hoping to beat the negative curve across the rest of the year.
“Essentially, the tourism business index is telling us that the improved trading conditions in the tourism sector have receded somewhat and that challenges remain, but the fundamentals for tourism are still good,” Ramawela concluded.
Source: Grant Thornton website – www.gt.co.za
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