Now Available: South Africa Tourism Report Q4 2013

Over the past quarter, BMI has become more optimistic on the outlook for the South African tourism sector, based on the strong figures released for 2012 by the Department of Tourism. As such, we have increased our forecasts for both inbound and outbound tourist flows, as well as the number of hotels in South Africa.

Overall, BMI believes that the value of South Africa's hotels and restaurants industry will increase by a strong 86% in US dollar terms over the 2013-2017 period, to reach US$16.34bn. In GDP terms, the contribution of the hotels and restaurants industry to overall GDP will rise from 2.43% in 2013, to 2.78% in 2017, underlining our upbeat stance on the South African tourism industry over the medium term.

A strong pick-up in growth of foreign tourism is anticipated over the coming years, largely due to solid economic growth in Sub-Saharan Africa (SSA). On the downside, the tourism sector still faces considerable headwinds arising from continued weakness in Europe over the forecast period. Lastly, domestic tourism should be bolstered by relatively strong economic growth anticipated for South Africa.

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Speaking in September 2013, the Chairman of South Africa Tourism, Frank Kilbourn, said that the country will have to look to other emerging tourist markets (such as the BRIC states (Brazil, Russia, India and China) as uncertainty continues to cloud the economic outlook for Europe, historically one of South Africa's leading tourism markets. This ties in with BMI's analysis of the situation, which believes that arrivals from China and India in particular will prove ever more crucial to inbound tourism flows over the coming years.

Indeed, arrivals from China have trebled over the 2009-12 period. BMI's forecasts are calling for a further 63% growth, to take total arrivals to 265,000 by 2017. All told, tourist arrivals from the BRIC states totalled 330,834 in 2012.

Looking at early trends for 2013, the most recent arrivals data (for the January-April 2013 period) from South Africa Tourism show an 8.2% increase in overseas (i.e. non-African) tourist arrivals. This bodes well for BMI's full-year target of 9% annual growth to be reached. Looking at the total arrivals figure, including Africa, there was 6.3% growth over the first four months of the year, to 3,2645,474.

The South African government currently has ambitious targets for increasing foreign tourist arrivals, targeting 12mn by 2015 and 15mn by 2020. BMI's forecasts are slightly more cautious, calling for the 12mn mark to be passed in 2016. However, we remain broadly optimistic for the tourism sector's outlook overall, with the industry set to continue to receive strong levels of government support over our forecast period.

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