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Update on the Tourism Global Competitiveness Programme (GCP)
14 September 2010
2GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
The original 2003 / 2004 Global Competitiveness Programme (GCP) was part of a
larger initiative to forge and manage strategic alignment across the sector
Sustainable competitiveness is not an accident - it is created through the deliberate development of the context within which firms compete
Global CompetitorsGlobal Competitors
Domestic DemandDomestic Demand
National GoalsNational Goals
Competing Competing OperatorsOperators
Competing Competing OperatorsOperators
Supporting Supporting IndustriesIndustries
Supporting Supporting IndustriesIndustries
Consumer GoalsConsumer Goals
Strategic ContextStrategic ContextStrategic ContextStrategic Context
GlobalDemandGlobal
Demand
Competing Product Competing Product OwnersOwners
Competing Product Competing Product OwnersOwners
SAT, the former DEAT and the dti launched the first Global
Competitiveness Study focusing on understanding the
challenges to deliver on the marketing promise on a
sustainable long term basis
3GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Travel & Tourism Competitiveness Index: SA (out of 133)2009 Index 612008 Index 60 T&T regulatory framework 82Policy rules and regulations. 36Environmental sustainability 44Safety and security 128Health and hygiene 94Prioritization of Travel & Tourism 60T&T business environment and infrastructure 52Air transport infrastructure 43Ground transport infrastructure 64Tourism infrastructure 46ICT infrastructure 80Price competitiveness in the T&T industry 38T&T human, cultural, and natural resources 49Human resources . 112Education and training 48Availability of qualified labor 131Affinity for Travel & Tourism 43Natural resources 22Cultural resources. 45
Source: Travel & Tourism Competitiveness Report 2009 (World Economic Forum)Source: Travel & Tourism Competitiveness Report 2009 (World Economic Forum)
The World Economic Forum has ranked South Africa 8th out of 40 countries regionally and 61st out
of 133 countries globally during 2009. However we expect the rankings to improve due to the
successful hosting of the 2010 FIFA World Cup
The World Economic Forum has ranked South Africa 8th out of 40 countries regionally and 61st out
of 133 countries globally during 2009. However we expect the rankings to improve due to the
successful hosting of the 2010 FIFA World Cup
4GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Out of 133 countries globally, the following are some of South Africa’s rankings globally
during 2009
Some of the Competitive Advantages 28th for Visa requirements 29th for transparency of government policy making 16th for sustainability of Travel and Tourism Industry development 18th for Government prioritization of the Travel and Tourism Industry 17th for effectiveness of marketing and branding 25th for quality of air transport infrastructure 25th for availability of seat kilometers, international 30th for number of operating airlines 40th for quality of roads 37th for quality of rail infrastructure 1st for presence of major car rental companies 38th for hotel price index 15th for extent of staff training 49th for attitude of population towards foreign visitors 10th for number of World Heritage Natural Sites
5GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Out of 133 countries globally, the following are some of South Africa’s rankings globally
during 2009
Some of the competitiveness Disadvantages 128th overall ranking for Safety and Security 108th for reliability of police services 126th for quality of ground transport network 131th HIV prevalence
6GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
• Purpose: – To ascertain factors hindering SA’s competitiveness;– To understand the challenges to deliver on the marketing promise on a sustainable longer term
basis;• Objectives:
– Benchmark how SA was performing as a destination compared to other successful destinations;– Ascertain what was driving performance (Strengths and negative Weaknesses);– Develop approach to address weaknesses and capitalize on strengths;
• Project Managed by NDT, the DTI and SAT• Undertaken in two phases:
– Phase 1: Competitiveness of SA as a whole;– Phase 2:
Skills and Human Resources Development review ; Product Development incl. proposed product development in rural poverty nodes; Transformation;
First GCP study undertaken in 2003/4
7GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Each focus area or chapter had specific sub-elements
The configuration and functioning of the value system
Drivers and barriers of growth in tourism in SA
Product positioning, configuration and development
Investment and implications for future investment
Transformation of the SA tourism industry
Market Access
Capacity
Benchmarking performanceExternal benchmark
Mapping the cluster
The Channel
Internal benchmark
Consumer to market
Market to consumer
Airlift
Car Rental
Accommodation
Skills and service levelsInnovation & Competition
Product Development
Configuration - key markets
International desire, usage and satisfaction profiles
Domestic usage and satisfaction profiles
Key metrics
Drivers and barriers
Current investment status
Investment Issues
First GCP study undertaken in 2003/4 (cont.)First GCP study undertaken in 2003/4 (cont.)
8GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
–Market access
–Air access–Skills–Public transport–Transformation– Information– Innovation, product
development, investment and SMME development:
First GCP study undertaken in 2003/4 (cont.)First GCP study undertaken in 2003/4 (cont.)
• Identification of new markets and discussions around visas ongoing;
• Airlift strategy;• HRD Strategy;• Discussions with DoT;• Sector codes gazetted;• One contact number/centre, VICs etc;• Investment portfolio, Implementation of
Second Economy Strategy, SMME development through TEP;
•Outcomes: Factors hindering SA’s competitiveness include –•Outcomes: Factors hindering SA’s competitiveness include –
9GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Based on the prioritisation of the twenty development areas, nine areas were selected
by the working team for further analysis
Note: Areas 12 and 13 were combined and collectively analysed as the Wild CoastSource: Statssa Census 2001, Demarcation Board, HSRC, Monitor Group analysis
0 1 000 2 000 3 000 4 000 5 000
Poverty Gap (Rm)7,500
Relative Market Potential (Volume Weighted)
Low
High 17. Greater Durban & Pietermaritzburg10. Port Elizabeth &
Surrounds
6. Garden Route & West Sunshine Coast
3. Whale Coast & Overberg
1a. Namakwa
5. Beaufort West7. East Kalahari 9. Eastern Cape Karoo
22b. Alexandra
22a. Soweto1b. West Kalahari
19. Pilanesburg, Madikwe & Mafikeng
28. Central Limpopo
14. Witteberge Mountains
31. Dolphin Coast & Southern Zululand
18. Elephant Coast & Surrounds29. Panorama Region
12. East London & Lower Wild Coast
16. Drakensberg
13. Upper Wild Coast
Prioritization Matrix
10GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
To support the South African Tourism in formulating future growth strategies by studying the overall performance and levels of competitiveness of tourism in South Africa
Overall Objective
Compare the tourism industry in South Africa with that of five other key competitor destinations (Australia, the US, Kenya, Thailand, and Brazil) across several performance indicators and macroeconomic factors
External Benchmarking of South Africa with Key
Competitors
The 2010 study reviewed four modules of the original GCP study for the period 2003 – 2008 in order assess progress that the industry has made over this period
Study the relative performance and contribution of the tourism sector vis-à-vis other major economic sectors of the country
Internal Benchmarking of Tourism sector in South
Africa
Assess the current state of tourism in the country and analyze the key drivers and barriers to the growth of tourism sector
Analyse the various tourism products and services offered by the country and their accessibility to the tourists
Analysis of Drivers and Barriers to Growth
Analyse the gaps in desirability, expectation, experience, and usage of various tourism products and services, for domestic and international tourists
Desire, Usage and Satisfaction Level of
Tourists
Desktop study
Sources used in 2010 study
In addition to the sources used in previous study, the current study leverages:
•Euromonitor International database
•Global organizations such as World Economic Forum, UNESCO, IMF, etc.
•News and articles published on various portals
•Government and related bodies such as Stats SA, South African Reserve Bank, and NEDLAC
11GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Brazil has seen jobs grew in line with tourist arrivals, while Australia has seen jobless growth
Note: 1Direct and Indirect contribution of tourism industry to GDP. Numbers have been validated from respective tourism websites of various countries; 2 This number is calculated after removing ‘day tourists’ from the overall number of arrivalsSource: The Travel & Tourism Competitiveness Report 2009’, World Economic Forum, February 2009; ‘Managing Tourism at World Heritage Sites’, UNESCO, 2002; ‘Travel And Tourism in the US’, Euromonitor, September 09; Bangkok Post; BBC; CNN; Tourism Research Australia; WTTC; Stats SA; ‘The Impact of Tourism on the Economy of South Africa – 2007’, SAT, August 2008
Travel and Tourism Parameters
Tourism Employment in ‘000s (2008)
Growth (03-08)
Direct: 499
Total: 1,176
0%
Direct: 2,222
Total: 5,507
4%
Direct: 1,900
Total: 4,178
2%
Direct: 168
Total: 406
1%
Direct: 5,477
Total: 14,488
-1%
Direct: 439
Total: 1,042
4%Tourist Arrivals in ‘000s
(2008)
Growth (03-08)
5,586.0
3%
5,156.5
5%
14,243.2
6%
1,363.0
4%
58,029.8
7%
7,0872
9%
Recent Developments
Current year has remained the worst year for Australian tourism since 1989, with 4.1% decline in
tourist arrivals
Host to major sports events in 2014
(FIFA World Cup) and 2016 (Olympics)
Tourism has suffered in recent years due to the economic crisis,
breakout of H1N1, & internal political
unrest
Tourism industry has suffered in
recent years due to political unrest
Faith tourism is emerging as a popular tourism sector in the US
Host to 2010 FIFA World Cup, which is expected to boost
foreign arrivals
Tourism Contribution to GDP in USD Bn1 (2008)
Growth (03-08)
1,388.7
5%
104.7
12%
99.0
24%
41.3
14%
23.5
13%
3.2
16%
South Africa KenyaThailandAustralia BrazilUSA
Direct Contribution to GDP in USD Bn (2008)
% contribution
62.8
4.4%
58.2
2.2%
24.7
6.8%
2.0
4.8%
709.7
3.5%
14.7
3%
Indirect Contribution to GDP in USD Bn (2008)
% contribution
41.8
11.2%
40.8
5.7%
16.6
15.6%
1.2
10.3%
678.9
10%
8.8
8%
Five competitor countries were reviewed. These countries were identified as
competitors through consumer research conducted since 2001
12GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Drivers of Performance
During the period 2002–2008, South Africa witnessed the highest growth in spend by international
visitors (in local currency) as compared to other competitors
South Africa’s travel and tourism sector witnessed a steady growth of ~3.2% in employment over
the period of 2002–2008
• Employment count for the US witnessed a decline (primarily due to the global recession and
reduced outbound/domestic tourism) over 2003–2008
• Other key competitor countries – Brazil, Kenya and Thailand – witnessed a positive growth in
employment in the travel and tourism sector over 2003–2008
The government of Australia spends ~1.8 times more than South Africa on travel and tourism
Driversof
Performance
TouristPerformanceParameters
EconomicBenefits
13GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Tourism Performance Parameters
The total number of international tourists to South Africa has witnessed a strong growth –
significantly higher than many the other key competitors
South Africa has witnessed a decline in the average length of stay over 2003–2008 while in
countries such as Australia, the average length of stay has grown by 3.9%
• Within South Africa, air arrivals tend to stay for longer duration than land arrivals
Australia, by far, captures more nights per tourist than any other tourist destination
Overall, about three-quarters of the visits to South Africa are for leisure purposes
• During the last five years South Africa has outpaced the growth of all the other competitor
locations in the leisure arrivals category
Driversof
Performance
TouristPerformanceParameters
EconomicBenefits
14GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Economic Benefits
Amongst all the key competitors, South Africa had the highest number of tourists per direct employee, ~16 tourists per employee - i.e. South Africa creates fewer jobs per tourist arrival
• Australia, which received ~11 tourists per employee, registered the highest tourism spend per employee (~USD 43,600, in 2008)
• Tourists to South Africa from air markets creates more jobs than their land counter-parts, ~6 tourists per employee; this compares well with competitors
South Africa witnessed good growth (~7.9%) in tourist spending per employee between 2002 and 2008 and extracts more value per tourist than Brazil, Kenya and Thailand
Driversof
Performance
TouristPerformanceParameters
EconomicBenefits
15GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Number of Arrivals per Direct Tourism
Employee
Tourist Arrivals per Direct Tourism Employee1Tourist Arrival Per Employee2,
2008
7.5
10.6
11.2
16.1
2.3
8.1
Note: 1Number of foreign arrivals per direct tourism employee is calculated as follows: Total International Visitors/Number of people employed in the economy as a direct contribution of the tourism sector; 2Numbers have been validated from respective tourism websites of all the countries. Economy direct employment means employees directly engaged in the Travel and Tourism industry. The value for this parameter is computed by taking into account the GDP contribution of the tourism sector. Economy indirect employment considers employees engaged in intermediate sectors such as suppliers of intermediate inputs to tourism industry as well as suppliers of investment goods to the tourism industry and of goods to tourists overseas such as construction firms building hotels. GDP contribution of respective sector (in which the intermediate supplier falls into) is used to derive this number. For South Africa, it has been assumed, that ~50% of the tourists from Botswana, Lesotho, Mozambique and Swaziland are not tourists, and hence, are not considered for calculationsSource: Euromonitor; WTTC; Stats SA
South Africa
US
Kenya
Brazil
Thailand
Australia
South Africa
Relative to other markets, SA creates fewer jobs per tourist arrival
0
6
12
18
2002 2003 2004 2005 2006 2007 2008
16GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
0
10
20
30
40
50
2002 2003 2004 2005 2006 2007 2008
Am
ount
(U
SD
‘000
)
Tourist Spend Per Employee (USD),
2008
8,622
23,933
43,597
20,729
2,546
6,135
10.8%
15.1%
10.6%
14.8%
2.7%
7.9%
Total Spending by International Visitors1 in Country per Direct Employee2 (USD)
CAGR (2003–08)
Note: 1‘Total Spending by International Visitor’ has been converted from local currencies to USD by using the conversion ratio for each respective year from Oanda.com as shown above; 2Total spending by international visitor in country per employee is calculated as follows: Total Spending by International Visitor/ Number of people directly employed in the tourism sector. The value for this parameter is computed by taking into account the GDP contribution of the tourism sectorSource: Tourism Impact Data and Forecast Tool, WTTC; Euromonitor
Australia
Thailand
Brazil
Kenya
US
South Africa
South African Tourism could extract more value out of the tourists (as compared to Australia and the USA) – increasing the length of stay could be one way of achieving this
Exchange Rate
2002 2003 2004 2005 2006 2007 2008
1 USD to Local
Currency
AUD 0.54414BRL 0.36119KES 0.01277ZAR 0.09593THB 0.02329
AUD 0.65249BRL 0.33138KES 0.01326ZAR 0.13365THB 0.02413
AUD 0.73712BRL 0.34256KES 0.01270ZAR 0.15621THB 0.02489
AUD 0.76280BRL 0.41308KES 0.01329ZAR 0.15800THB 0.02489
AUD 0.75356BRL 0.46072KES 0.01398ZAR 0.14916THB 0.02644
AUD 0.83898BRL 0.51630KES 0.01499ZAR 0.14236THB 0.03126
AUD 0.85296BRL 0.55716KES 0.01506ZAR 0.12327THB 0.03064
South Africa
While SA creates fewer jobs per total foreign tourist arrival, it extracts a fairly high
value per tourist, better than Brazil, Kenya and Thailand
17GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
• South Africa’s tourism industry contributes substantially to the country’s economy. Driven by a growth in foreign
arrivals, its contribution has been increasing in recent years
• Between 2002 and 2008 , the overall tourism industry (direct and indirect) has grown in terms of its contribution to GDP at a faster rate than all sectors of the economy
– The direct contribution has grown at 10.2% p.a. on par with the construction industry (10.4% p.a.) which is the fastest growing sector of the economy
– Growth in GDP contribution has not translated into a commensurate increase direct or indirect employment
– Tourism employment witnessed a 3.2% CAGR over 2002–2008
– Employment growth was marginally behind the average growth of all sectors
• In absolute terms, the tourism industry is one of the smaller sectors of the economy both in terms of total GDP contribution and direct employment
• Also, the employees of the tourism industry contribute substantially to the GDP of the country
– In 2008, tourism’s GDP contribution per employee stood at ZAR ~167,000 (direct) and ZAR ~201,000
(indirect)
– GDP contribution per employee has witnessed high positive growth over 2002–2008, with direct
contribution growing at ~7% CAGR, and indirect contribution growing at ~10%
South Africa
Internal benchmark – tourism’s performance relative to other South African
economic sectors
18GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
CAGR(2002–2008)
2.1%
-0.1%
3.9%
3.8%
10.4%
4.6%
5.3%
7.1%
3.6%
Tourism’s overall contribution to GDP has grown at a faster rate than most
sectors of the economy and as fast as the construction sector
10.2%
6057575044
4341
162156
147139132126119
5349
4339
3432
29
3635
3433
3129
29
100105
105106
105103
100
4137
3537
363636
0
300
600
900
1 200
1 500
1 800
297
335163
377
99
322 63
1,560
349
218
195
290
173
233
121
73
220
1,620
98
1,330
182
285
280
140
83
1,478
308
324
71
1,401
276
207
121
62
297
296
195
259
106
1,236
270
249
244
103280
261
1,273
168
236Constant
2005 prices
ZAR Bn
2002 2003 2004 2005 2006 2007 2008
Note: 1Quarterly value added by industry and gross domestic product at constant 2005 prices; 2For GDP figures, the ‘Services and others’ sector includes ‘general government services’ and ‘personal services’Source: ‘Gross Domestic Product (GDP), 3rd Quarter 2009’, Stats SA, November 2009; WTTC; Grail Research Analysis
Tourism (Direct)
Services and others2
Finance, real estate,
insurance andbusiness services
Transport, storage
and communication
Wholesale and retail
trade
Construction
Tourism (Indirect)
Electricity, gas and
water supply
Manufacturing
Mining and quarrying
Agriculture, hunting,
forestry and fishing
13.5%
12.2%Tourism (Overall)
GDP Contribution1 by Sector (ZAR Bn), 2002–2008 CAGR (2002 – 2008)
19GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
However, this GDP growth did not lead to a commensurate growth in employment
despite tourism being a labour intensive industry
The tourism sector’s direct contribution to GDP experienced a strong growth between 2002 and 2008, however, the growth in direct employment was marginally below the average of all sectors
Note: For employment, ‘Services and others’ includes ‘community, social and personal services’ and ‘private households’. For GDP, ‘Services and others’ includes ‘general government services’ and ‘personal services’. 1Definition of direct and indirect tourism employee is same as Module 1Source: ‘Labour Force Survey Historical Revision September Series 2000 to 2007’, Stats SA, March 2009; ‘Quarterly Labour Force Survey (QLFS), 3rd Quarter 2009’, Stats SA, October 2009; ‘Gross Domestic Product (GDP), 3rd Quarter 2009’, Stats SA, November 2009; WTTC; Grail Research Analysis
A - Agriculture, hunting, forestry and fishing
B - Mining and quarrying
C - Manufacturing
D - Electricity, gas and water supply
E - Construction
Country Growth in Direct GDP (%)
Growth in Employment (%) Growth in
Arrivals (%)Direct1 Indirect
Australia 4.4 0.2 0.3 3.4
Thailand 7.1 1.6 1.6 6.2
Brazil 11.3 3.2 3.2 4.5
Kenya 17.6 0.7 0.7 3.5
US 3.5 -0.7 -0.7 7.1
South Africa 10.2 1.5 4.6 7.9
F - Wholesale and retail trade
G - Transport, storage and communication
H - Financial intermediation, insurance, real estate and business services
I - Services and others
J – Tourism (Direct)
K – Tourism (Indirect)
% G
row
th in
Em
ploy
men
t
% Growth in Contribution to GDP
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
-1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11%
E
F
DK
JI
H
G
AB
C
Overall employment growth over 2002–2008: 2.3%
Overall GDP growth over 2002–2008: 4.6%
Growth in Employment vs. Growth in GDP Contribution (CAGR: 2002–2008)
Growth (%)
Country Direct GDP
EmploymentArrivals Spend2
Direct1 Indirect
Australia 4.4 0.2 0.3 3.4 11.1
Thailand 7.1 1.6 1.6 6.2 13.8
Brazil 11.3 3.2 3.2 4.5 17.9
Kenya 17.6 0.7 0.7 3.5 6.5
US 3.5 -0.7 -0.7 7.1 7.8
SA 10.2 1.5 4.6 7.9 14.9
20GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Understanding the Accessibility of South Africa as a Tourist Destination
Market Access
Accessibility of South Africa as a Tourism Destination
Strength of South Africa as
a Brand
Source of Information for
Tourists
Constraints to Visit South Africa
The awareness and brand recall of South Africa as a leisure destination is highest across European countries such as Sweden, the UK and the Netherlands, etc.
• In addition to the European countries, Kenya also shows high consideration to visit South Africa in the future
Although India and Italy have low levels of brand recall, they consider South Africa to be a very likeable leisure destination
While the majority of key leisure tourist markets exhibit a high short-term consideration to visit South Africa, only a few actually view South Africa as their favorite destination
South Africa is rated significantly above average for its nature & wildlife offerings, however, tourists across all key markets unanimously perceive South Africa as being unsafe and offering poor value for money
Tourists across key markets prefer to visit a destination that is memorable, enriching, friendly and unique
• These tourists perceive South Africa as being adventurous, breathtaking and unique
Tourists primarily use internet search engines and ‘word of mouth’ as the key sources to gather information on South Africa
• Travel brochures, and television programs, have been the most successful media to promote South Africa as a tourism brand
• Only in Africa, where the internet penetration is low, VFR is the primary reason to visit South Africa
Even after seeking information on South Africa, tourists do not visit South Africa primarily due to safety and security concerns and high costs of travelling
• Despite these concerns, a high percentage of tourists continue to recommend South Africa as a leisure destination to their friends and families – indicating an overall positive experience
21GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Note: Markets include 13 countries, namely Australia, Canada, China, France, Germany, India, Italy, Japan, Kenya, Netherlands, Nigeria, UK and USAQ. Why haven’t you visited South Africa for leisure purposes in the past 5 years?; 1Include concerns over health, weather, roads, crime, etc. Q. After seeking information about South Africa, why are you no longer planning to visit it for leisure travel?; 1Include concerns over health, weather, roads, crime, etc.Source: SAT Brand Tracker (combined samples from February 2009 and November 2009 waves)
6%4%7%7%
9%12%14%
18%
26%28%29%32%
36%
0%
10%
20%
30%
40%
Concern about AIDS
Uncertain about
political climate/civil unrest
General issues
of safety1
Concerns for my
personal safety
Too much time to
get there
Too expensive once there
Don’t know anyone there
Too expensive
to get there
Not a relaxing
destination
No particular reason
Nothing interesting
to do there
OtherAnother destination was more appealingP
erce
ntag
e of
Res
pond
ents
Reasons for Not Visiting South Africa in Past Five Years, 2009 (n=12,911)
There are a number of barriers to travel to South Africa. However, the negative
perceptions of safety and security and value for money are the biggest barriers
18%
5%8%
12%12%13%
27%
34%37%
0%
10%
20%
30%
40%
Too expensive once there
Too expensive
to get there1
Too much time to get
there
Not a relaxing
destination
Nothing interesting to
do there
OtherConcerns for my
personal safety
Don’t know anyone there
General issues of
safety1
Reasons for Not Visiting After Seeking Information on South Africa, 2009 (n=2,023)
Per
cent
age
of R
espo
nden
ts
People who are aware of South Africa
58.56 MM(65%)
People aware of South Africa and considering to visit the country
24.16 MM(41%)
People who mentioned that they will visit South Africa in next 18 Months
7.59 MM(33%)
Actual arrivals from the target segments (in the next 18 months)
0.82 MM
89.51 MMTarget Population
30.95 MM leakage
34.4 MM leakage
16.57 MM leakage
6.77 MM leakage
22GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
32%30%32%
12%10%11%
36%34%37%
0%
20%
40%
60%
80%
2009
% Respondents
20082007
Too expensive to get thereToo expensive once there
Overall Value for Money Impact
Top reasons for not Visiting South Africa as a leisure Destination in the past 5 Years, 2007–2009
Source: SAT Brand-Tracker Survey 2007–2009; Monitor Analysis
Overall, value for money contributes toward ~36% of tourists not visiting SA - the
price of a plane ticket being the main barrier
23GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Although general issues of safety and security is one of the reasons for not visiting SA, tourists
who have been to SA have a better perception about the country, with their perception having
improved over the years.
YearYear
Does not describe at
all
Describes very well
24GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Airlift
Airlift capacity and connectivity is a possible barrier that hinders the growth of the South African tourism industry
• In South Africa, the domestic carriers operate at high load factors, and the capacity of international airports only marginally exceeds demand – hence, a possible need for capacity expansion
• In Jan 2010, ACSA proposed to increase the air tariffs (including passenger charge, landing fees and rentals) by 133% - together with high fuel prices, this is likely to significantly increase the cost of an air ticket
South Africa is well connected to international locations, but mostly through indirect flights – direct connectivity can result in more tourist inflow
Drivers and Barriers to Growth
Capacity Assessment – Snapshot (1/2)
Airlift
Car Rental
Capacity Assessment
Car Rental
The car rental industry is a enabler of tourism growth
• With increasing fleet size, and low rentals, the car rental industry appears to be becoming more competitive and increasing capacity which is important for the growth of tourism industry, especially in light of the lack of well-developed alternative means of public transport
The success of the industry is, however, sensitive to fuel prices. In the recent past, the
industry suffered due to an increase in fuel prices in South Africa
25GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
83
88
60
82
78
77
80
81
66
85
79
77
020406080100
Load Factor (%)2003
2008
85
90
84
81
81
80
79
66
86
80
88
0 20 40 60 80 100
Netherlands
Australia
UK
Load Factor (%)
France
Germany
US
2008
2003
Load Factors, Routes Between International Locations and South Africa1, 2003–2008
Route from Destination to SA Route from SA to Destination
Most load factors on major routes are high (>75%) and load factors on routes to, and
from, Netherlands and the route to Australia has increased between 2003 and 2008
Note: 1Above information is only for direct flights between the departing and arrival country; The six countries chosen in the analysis “International Load Factors” are the top six non-African nations which South Africa receives the maximum number of tourists (Australia, UK, Netherlands, US, Germany, and France)Source: OAG Aviation
26GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
% L
oad
Fac
tor
64%67%68%
78%
85%85%88%
0%
20%
40%
60%
80%
100%
SA Express AirwaysAirlinkSouth African Airways
Nationwide AirlinesMango1timeKulula
Source: ‘Transportation – South Africa’, Euromonitor, November 2009
Load Factors of South African Airlines, Domestic Airlines, 2008
Low cost domestic airlines such as Kulula, 1time, and Mango (~85%) experienced
higher load factors than South African Airways (68%) in 2008
27GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Capacity Assessment
Drivers and Barriers to GrowthCapacity Assessment – Snapshot (2/2)
Accommodation
Skills and Service Levels
Note: 1A ‘Stay Unit’ is ‘The unit of accommodation available to be charged out to guests, for example, …a room in a hotel’,
28GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Recommendations
The skills and training sector of tourism present the largest and most immediate barrier for future growth– THETA needs to be equipped with the correct levels of capacity to more effectively plan and
facilitate skills development in the industry– This should include initiatives to improve the relevance of current training programmes /
curriculum and institutional capacity– In order to achieve this, THETA needs to collect in-depth data on human resources within the
tourism industry This will allow THETA to understand, and plan for, current and future skills gaps more
effectively High load factors along key domestic and international routes could become a barrier to growth
and needs to be monitored actively The effects of increased accommodation capacity as a result of the 2010 World Cup on industry
occupancy levels should also be actively monitored Planning for the tourism industry needs to take cognisance of its broader, cross-cutting impact on
many industries especially the Retail & Wholesale, Electricity & Gas and Transport industries
– More industry collaboration, even at a provincial level, between the tourism sector and industries it influences could facilitate an increase in the total economic contribution of the cluster of industries
The skills and training sector of tourism present the largest and most immediate barrier for future growth– THETA needs to be equipped with the correct levels of capacity to more effectively plan and
facilitate skills development in the industry– This should include initiatives to improve the relevance of current training programmes /
curriculum and institutional capacity– In order to achieve this, THETA needs to collect in-depth data on human resources within the
tourism industry This will allow THETA to understand, and plan for, current and future skills gaps more
effectively High load factors along key domestic and international routes could become a barrier to growth
and needs to be monitored actively The effects of increased accommodation capacity as a result of the 2010 World Cup on industry
occupancy levels should also be actively monitored Planning for the tourism industry needs to take cognisance of its broader, cross-cutting impact on
many industries especially the Retail & Wholesale, Electricity & Gas and Transport industries
– More industry collaboration, even at a provincial level, between the tourism sector and industries it influences could facilitate an increase in the total economic contribution of the cluster of industries
29GCP review 2010 – Portfolio Committee Copyright © 2010 South African Tourism
Moving forward the following aspects are important: Work with the International Marketing Council to be undertaken to change the
perception of ‘Safety and Security’ by potential visitors to SA. Reducing the gap between the perception of those who visit SA and those who do not visit SA will also be important in order to reduce the impact of this concerns on travelling;
Special attentions should be given to perceptions of ‘Value for Money’; Resourcing of Tourism: The creation of a stand alone Department of Tourism started to
address this aspect; The Sector has for the first time a draft National Tourism Sector Strategy that will guide
the sector and ensure alignment and integration with a dedicated focus on competitive advantage for destination South Africa. This needs to be finalised and implemented;
Need to forge relationships with other countries to unlock the potential of tourism through e.g. Comprehensive Tourism Trade Agreements;
Moving forward
Thank you