Improved global economic conditions boost Q1 business performance

Respondents to the quarterly index, a flagship project of the Tourism Business Council of South Africa (TBCSA) compiled by Grant Thornton, also highlighted improved marketing and positive media coverage as contributing factors.

A rebound in the market

TBCSA's CEO, Mmatšatši Ramawela, welcomed the results, saying that some of the industry's good performance can be attributed to improved economic conditions in the global environment, as well as current efforts to promote the destination in new source markets. "Over the past two years, we've seen constrained overseas leisure demand, particularly from our traditional source markets such as the UK. We are encouraged to see a rebound in the market, but also recognise that there is growing demand for both leisure and business travel in emerging markets within regional Africa and the BRIC countries."

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 forex traders.

The accommodation sector performed slightly better than expected with an index of 116.1 compared to the forecasted index of 107.3. Notably, this is the sector's second-highest recorded performance level achieved since TBI's inception in 2010. The highest recorded performance level was reached in Q1 2013 when the index peaked at 120.9.Expectations for the second quarter of the year remain close to normal at 103.2, with an anticipated strong positive performance forecast for self-catering & camping, timeshare and hotel establishments.

A slightly weaker performance

Other tourism businesses experienced a slightly weaker performance of 109.6 - with travel agents recording a significantly worse than normal performance. However, operators in this sector remain fairly optimistic going into the next quarter.

Head of advisory services of Grant Thornton, Gillian Saunders, added that in this quarter the index survey included questions on the likely impact of the forthcoming national elections on business. "When taking into account both the accommodation and other tourism businesses, more than half (56.3%) of respondents are of the opinion that the elections will not have an impact on business, with some citing the possibility of an increase in leisure demand as an implication of the voting day being declared a public holiday.

However, with 37% expecting a negative impact from the elections, on balance the industry is 30.1% negative in expecting that the elections will have a negative impact on business performance. The extra midweek public holiday disrupting business travel and people not travelling in order to be able to vote at their voting stations are cited as impacts."

In closing, Ramawela said the organisation was pleased to see that business performance in the sector remained buoyant and was responding well with the rebound in international travel demand. "Now that the Easter holiday and the election weekend are upon us, we hope to see positive performance from the domestic leisure market in the second quarter," she said.

View the full TBI 2014 Q1 Report