Exponential growth of South Africa’s tourism industry - Latest Tourism Statistics
01 March 2007 - ADDRESS BY THE MINISTER OF ENVIRONMENTAL AFFAIRS AND TOURISM, MARTHINUS VAN SCHALKWYK AT THE MEETINGS AFRICA BUSINESS TOURISM CONFERENCE, SANDTON CONVENTION CENTRE

Exponential growth of South Africa’s tourism industry - Latest Tourism Statistics

INTRODUCTION

It gives me great pleasure to address you at the opening of the Business Tourism Conference. South Africa's economy has been in an upward phase of the business cycle since September 1999. This has been the longest period of economic expansion in our country's recorded history. Our tourism industry, having overtaken gold as a source of foreign exchange, is one of the major contributors to this growth.

Government made a commitment to the tourism industry six years ago, and together, we have stayed the course, with excellent results. Since 1999, we have increased the budget allocation for tourism 400%, and the effect on the industry’s growth has been phenomenal.

Our first focal point was to put South Africa on the map by achieving global competitiveness in leisure tourism. This was based on the fact that globally, leisure constitutes the largest slice of the tourism pie. The second critical decision taken jointly by government, in partnership with business, was to focus on domestic tourism because any tourism destination that takes itself seriously needs to have a strong domestic tourism market. The result of this was the Sho’t Left Campaign, which has been operating successfully for the past three years.
The South African Meetings Industry Federation and government, represented by South African Tourism, agreed on a global launch for business tourism in 2005. This marked the start of a concerted joint effort to focus on growing business tourism in the country. Over the past three years, government has dedicated an average of R17 million per year to business tourism and we will continue to invest in this segment in future.

I am also happy to announce that the South African Tourism Board has now approved the comprehensive new Business Tourism Growth Strategy. The strategy is the result of extensive consultation between the business tourism industry and government, which was designed to ensure that we align our efforts in respect of the growth of this industry. Now that we have the strategy in place, the importance of the ongoing partnership between government and industry during the implementation phase cannot be understated.

I call again on all partners to redouble our efforts in growing business tourism as we did with leisure. Our combined efforts will enable tourism in South Africa to take another quantum leap forward. I would like to assure industry that you have a committed partner in government. You have invested substantially in the development of the sector through the R55 million that we receive annually through the Tourism Levy. You have further demonstrated your commitment by serving on the boards of our statutory bodies. We have worked together successfully and there is no time for complacency.

LATEST TOURISM STATISTICS

What we have achieved together is reflected in the exponential growth of South Africa’s tourism industry since our transition to democracy in 1994. It gives me great pleasure to announce that the latest tourism statistics, covering the period January to September 2006, show that we have beaten our best performance yet again. We had a 14.5% increase in tourism arrivals over the comparable figure for 2005. This means that South Africa had 765 675 more visitors in the first nine months of 2006 than in the first nine months of 2005.

Over 6 million people (6 055 726) visited South Africa between January and September last year, suggesting that we are well on track to surpass the annual record that we set in 2006. Once more, the largest source of growth was Africa, with an increase of 18.3% in arrivals from the African continent. However, we also saw strong growth in arrivals from North America, with an increase of 9.7%, representing almost 20 000 more visitors.

Although it was off a low base, we saw a massive 42.4% increase in visitors from the Russian Federation, 24.1% more visitors from Hungary and 17.4% more visitors from Finland. This shows that we have been successful at achieving broader market penetration on the European continent, beyond our traditional source markets in Western Europe. The growth rate for arrivals from the continent as a whole was 4.6%, which was just ahead of the global average growth rate of 4.5% for the year.

We are pleased with having achieved a 4.5% increase in arrivals from Asia, in particular with 17.5% more visitors from India and excellent growth in arrivals from Japan, Thailand and Singapore. However, a decrease in arrivals from China, Malaysia and the Phillipines, suggests that we need to improve our efforts to attract visitors from these key markets.

Growth in South African and indeed sub-Saharan African tourism is driving overwhelmingly positive tourism performance on the continent. Over the past two years Africa has achieved the fastest growth rates of any major region in the world. According to the United Nations World Tourism Organisation: “Africa has outpaced all other regions with almost twice the rate of global growth reaching 8.1% in 2006, following an already strong 2005. This star performance was led by Subsaharan Africa (+9.4%), while North Africa (+5.8%) also ended the year above average. Major destinations such as South Africa, Kenya and Morocco all continued to post excellent results.”

BUSINESS TOURISM

Business tourism is an increasingly important segment of our growing industry. Business travel is a lucrative sector of the market, which ramps up tourism’s contribution to the economy in general. On average, business travellers spend three times more than leisure travellers and up to 40% of business travellers return to a destination within five years. There is also significant crossover into the leisure travel market. 18% of business travellers go on tours prior to their business activities, while 22% do the same afterwards.

Business tourists currently make up 5% of South Africa's total tourism market. I am certain that this figure will be improved upon in the lead up to 2010, and believe that the industry’s vision of doubling this figure in the next three years is not overly ambitious. The further development and roll out of the Business Unusual campaign will play an important part in the expansion of the sector.

Business tourism contributed R2.3 billion to overall tourism revenue in 2005, representing just over 4% of the total. Yet, business tourists have a much higher average daily spend than leisure tourists. This suggests that there is room to attract more business tourists and to extract more value from them, and that the rewards for doing so will be substantial. If the business tourism sector succeeds in increasing the proportion of business tourists, and if they win the additional challenges of getting them to stay longer and spend more, we will ultimately increase the number of jobs created per tourist. This will be crucial if our sector is to meet the expectations created by its priority position within ASGISA.

CONCLUSION

Last week, in his delivery of the annual Budget Speech, the Minister of Finance reminded South African businesses to be mindful of the lucrative niches in the global economy. The business tourism market is one such niche. I am encouraged by the presence and participation of well respected international experts and hosted international buyers at this conference. I hope that your interaction with our local industry will be long-lasting and mutually profitable.

Our department has taken heed of the President’s call for better co-ordination between government departments to improve service delivery and avoid duplication and wastage of effort. As a result, we are working closely with the Department of Transport, represented here by Minister Jeff Radebe, to ensure that our transport infrastructure takes into account the requirements of our visitors as well as our people. We are also working closely with the DTI to ensure that our support packages are compatible so that we can practically assist the industry to reach even greater heights. And that in return, the industry can assist us in delivering on our promise to create jobs, reduce poverty and build a South Africa that is equally enjoyed by all who live in it.
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