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Greater demand and lower fuel prices buoy SA tourism sector


Cape Town - The South African tourism business sector has ended the fourth quarter of 2014 off on a positive note, despite setbacks caused by the implementation of new visa rules and the Ebola outbreak in several West African countries.

The accommodation sector recorded its highest score  in the last quarter of 2014, consolidating a year of largely positive performance for the local travel and tourism industry.

The Tourism Business Index, compiled by Grant Thornton and released this week by the Tourism Business Council of South Africa (TBCSA), highlights that the Quarter 4 score of 113,3 for the accommodation sector, exceeding the expected performance  of 110,4.

Overall, the industry performed almost in line with expectations recording a score of 108,3 compared to the forecast score of 109,8 . A score of 100 represents normal trading performance.

TBI comprises two sub-indices: 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 foreign exchange traders.

In Q4, the Other Tourism business segment (excluding accommodation) achieved a score of 104,4 points, five points lower than forecast but this still indicating a positive sentiment in the industry. 

Reflecting on last year’s performance TBCSA CEO, Mmatšatši Ramawela said, "2014 was by no means an easy year for the local travel and tourism industry.  Although we experienced a dip in businesses performance in the second quarter we are happy to see that the fourth quarter concluded the year on a positive note”. 

“The greatest positive contributing factor towards both Accommodation and Other Tourism businesses is the weak rand exchange rate,” says Gillian Saunders, Head of Advisory Services at Grant Thornton Johannesburg and Global Leader: Hospitality and Tourism for Grant Thornton International.  

“We expect the weak exchange rate to continue to have a positive impact on most businesses in both sectors for the next quarter.”

The forecast for the first quarter of 2015 is confidently buoyant, with most respondents expecting normal trading conditions.  Performance levels for Accommodation and Other Tourism businesses are forecast to reach scores of 101.9 and 102.7 respectively.

Assessing overall performance expectations for the rest of the year, industry outlook on indicators such as employment levels and capacity growth is fairly subdued.

When it comes to employment, the majority of all respondents (79.4% in both Accommodation and Other Tourism businesses) do not expect employment levels to change. A total of 16.8% of respondents expect to see an increase in employment levels and only 3.7% expect to see a decrease.

In terms of capacity growth expectations 75.9% of respondents surveyed do not expect capacity to grow this year. 

Reverting back to Q4, most concerning is that, cost of inputs remains the most cited negative contributing factor affecting business performance for the 10th consecutive quarter.

On the other hand, positive influences mentioned include the positive signs that the Ebola outbreak is being contained, greater business demand and lower fuel prices.

“Overall, we are pleased to see the industry remains resilient, as reflected by the TBI results in the last quarter of 2014. Looking ahead into 2015, we expect another challenging but exciting year ahead. TBI will continue to play a vital role in helping us to better understand the environment in which we operate,” Ramawela said.

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