The Tourism Business Index’s (TBI) latest results reveal that 2018 has been the worst year for business performance in South Africa since the inception of the index in 2010.
An initiative of the Tourism Business Council of South Africa (TBCSA), the TBI provides an indication of the current and likely future performance of businesses operating within the tourism sector in South Africa every year – and forecasts indicate a continued bleak outlook for the first half of 2019.
According to the report, the performance expectation for the last half of 2018 for the tourism industry was 59.2 against an index of 100 (the level at which normal performance is calibrated). However, the sector experienced an actual business performance index of 69.0 – lower than the overall 72.4 forecast for the period January to June 2019.
This poor performance has been attributed to a lack of demand from domestic and overseas leisure tourists, as well as a lack of domestic business tourism.
Country and investment buoyancy – be it from a business or leisure perspective – is very much confidence-based, which is a big driver in the demand-supply dynamic. And with the TBI being a perception-based index, says Rudi van der Vyver, CEO of the South African Association for the Conference Industry (SAACI) – and despite the leisure sector recovering well from issues such as the Cape Town drought, etc. these still plague the conferencing sector which is working on recovery.
The two sectors are linked, says Van der Vyver, with business tourism often triggering leisure tourism as delegates are exposed to the country pre- and post-event, leading to a conversion into later leisure tourism.
“So we need to up marketing spend to market our country as a business events and travelling destination. There is much residual spend around business travel – for example, when big events take place such as the Mining Indaba, or Decorex, business delegates see the potential for investment, either direct or indirect. So there is massive potential in terms of GDP spin-off if you have a larger focus on business events. This naturally, organically drives more leisure tourism.
“Marketing South Africa as a business events country is not as effective as it could be,” says Van der Vyver. However the business events space has got a stronger voice in the greater industry. “We now have more direct input into marketing strategy with SA Tourism, so part of our recommendations to them is to diversify the marketing strategy: not just focus on big leisure travel shows, but also the low-hanging fruit directly linked to source markets for business trade shows.”
Not all doom and gloom
Yet not all is doom and gloom. Van der Vyver says the current outlook for business tourism and events has seen a 55.8% increase in forward bookings from China – which is one of SA’s biggest business source markets.
“These forward booking figures are encouraging, but we can’t sit back and think business will just come to us,” he says. “We need to put work into proactive communication, destination marketing, and not be reactive. Let’s not leave it to the international media to report what’s happening – let’s proactively take a stance to make things happen for our industry, and collaboratively work towards turning the TBI figures around.”
To do this, Van der Vyver says, we need to get more events to SA, in any way, shape or form – and work on attracting corporate investment that will result in residual spend.
Tshifhiwa Tshivhengwa, CEO of the TBCSA, says the tourism industry as a whole has the potential to grow at a faster pace than its current performance. “The tourism sector’s below-par performance mirrors the general downward tendency in business performance across all industry sectors. For example, both the SAACI Business Confidence Index and the RMB/BER Business Confidence Index, showed a decline in their last reporting periods. We, at the TBCSA, are hopeful that once the elections are done and dusted, positive sentiment will return to the South African economy and our sector in particular.”