South Africa Tourism Report Q3 2012
Report Summary

The South African Tourism Report looks at the recent performance of the tourism sector and considers its prospects over the next five years. BMI believes the boost to the sector provided by the successful holding of the 2010 FIFA World Cup will continue to provide a fillip for foreign tourism, encouraging growth opportunities for arrivals outside more traditional source markets, such as from India, China, Canada and Brazil. A slight pick-up in growth of foreign tourism is anticipated over the next few years, largely due to acceleration in recent solid economic growth in Sub-Saharan Africa (SSA). On the downside, the tourism sector faces considerable headwinds arising from expected weakness in the eurozone over the forecast period. Domestic tourism should be bolstered by relatively strong economic growth in South Africa. In 2011, there was modest growth of 3.3% in tourist arrivals. The number of visitors from Europe declined by 5.8% compared with a year earlier, but this was understandable given the strength of tourism from Europe in 2010 when South Africa hosted the World Cup. Arrivals from Africa, the key source market, were up by a relatively favourable 5.1%. Although the region accounted for only around 4% of total arrivals, the strongest growth in visitors was from Asia, with visitor numbers up by 11%. Data for January 2012 show a solid start to the year, with tourist arrivals up by over 11% year-on-year (y-o-y). Growth in visitor numbers from both Africa and Europe was healthy, at around 10% and 7% y-o-y respectively, while from all other regions it was largely robust: 16% from North America and 57% from Asia. Following a rebound in the accommodation sector in Q411, figures for Q112 show the total number of foreign and domestic tourist room nights in all accommodation establishments rose by over 10% y-o-y. Over the last quarter BMI have revised the following forecasts/views: 􀂃 BMI’s forecasts for economic growth in SSA – the key source region – have been lowered to 5.5% and 5.8% (from 5.9% and 6.0%) in 2012 and 2013 respectively. 􀂃 For 2013, we have lowered our eurozone growth forecast to 1.0% from 1.2%, but our overall outlook remains the same: the eurozone is in for a protracted period of slow, painful internal restructuring characterised by weak economic activity. 􀂃 BMI expects the South African rand to appreciate to ZAR/EUR10.00 by the end of 2013 from ZAR/EUR10.80 at the end of 2011, putting added pressure on tourism from the eurozone. 􀂃 As part of plans to focus on its African route network, South African Airways’ (SAA) new route to Pointe Noire in the Republic of Congo was extended in May to include Cotonou in Benin.