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South Africa’s tourism business performance sees a further decline

10 May 2019

The tourism industry woes continue as 2018 proves to have been the worst year for business performance since the inception of the Tourism Business Index (TBI) in 2010.

The TBI, an initiative of the Tourism Business Council of South Africa (TBCSA) provides an indication of the current and likely future performance of businesses operating within the tourism sector in South Africa every year.   

The index shows a bleak picture of the outlook for the first half of 2019, although forecast to be better than 2018. It is still likely to be significantly below normal performance, where normal performance is calibrated at 100. The last time the industry performed above “normal” levels was in quarter four of 2016.

The major contributors to significantly below normal business performance is lack of demand from domestic and overseas leisure tourists as well as lack of domestic business tourism.

According to the report, the performance expectation for the last half of 2018 of the tourism industry was a mere 59.2. However, we experienced an actual business performance with an index of 69.0 against an index of 100. This index score is much lower than the overall 72.4 that is forecast for the next period (i.e. January to June 2019) and continues to reflect a pessimistic outlook for the tourism industry at below normal business performance.

When looking at 2019 as a whole, on balance, the accommodation respondents have a negative outlook (-80.4%) with 80.4% of respondents anticipating that business performance will get worse in 2019. This is the most pessimistic accommodation operators have been in the last 2 years. The Accommodation Sector forecasts that a lower than normal business performance will persist in the next period with an index of 71.9.

The TBCSA CEO, Tshifhiwa Tshivhengwa, following the release of the TBI report says that the tourism industry has the potential to grow at a faster pace than its current performance.

 “The tourism sector’s below par performance mirrors the general downward tendency in business performance across all industry sectors. For example, both the SACCI Business Confidence Index and the RMB/BER Business Confidence Index, showed a decline in their last reporting periods. We at the TBCSA, are hopeful that once the elections are done and dusted, positive sentiment will return to the South African economy and our sector in particular,” Tshivhengwa says.

The TBCSA has been at the front calling for urgent implementation of the E-visa system and visa waivers for various countries to boost tourism. These measures have been proven to increase overseas arrivals and we believe that the industry will see an increase in international arrivals if the issues around barriers to entry are prioritised.