Tourism operators remain optimistic despite challenging economic climate

By: Grant Thornton South Africa  12-08-2011
Keywords: Tourism

13 October 2011

South African Travel and Tourism operators remain somewhat optimistic of an improvement in business performance levels for the next quarter of 2011, in spite of prior performance expectations not having been met.  However, 2012 performance is still not expected to reach normal performance levels.  This is according to the results of the third quarter edition of the TBCSA FNB Tourism Business Index (“TBI”).

The TBI is an initiative of the Tourism Business Council of South Africa (TBCSA), sponsored by First National Bank (FNB) and compiled by Grant Thornton.  The index provides a national indication of the current and future performance, across the various businesses operating within the South African travel and tourism sector.

For the third quarter of 2011, the TBI registered a performance index of 70.0 against a normal of 100.  Although this lower actual performance is indicative of the current tough trading conditions, operators continue to expect an improvement in the performance going forward with the next quarter TBI forecast at 84.9.

Chief Executive Officer for the TBCSA, Mmatšatši Marobe, says business does have a reason to remain cautiously optimistic.  “Looking at the latest results, there are facets of the sector which are seeing better prospects, for instance in this quarter conference businesses are reporting improved performance levels”.

Once again, other tourism businesses, such as tour operators, activities and attractions, travel agents and FOREX operators indicated a higher performance level than the accommodation sector.

“There are always silver linings and opportunities in every phase of the economic cycle,” says Gillian Saunders, Head of Advisory Services at Grant Thornton. “Announced hotel closures are transpiring into sales, where investor operators are able to buy assets at a good price. Other brands can expand their footprint, taking on distressed independent properties. This type of activity underlines the long term potential and confidence in the industry despite the current poor trading performances.”

Pieter de Bruin, Head of Tourism at FNB Commercial, says: “The overall economic situation in South Africa and globally is uncertain and growth is depressed. The tourism sector is particularly impacted by economic realities, as both leisure and business tourism spending are largely discretionary and spending patterns change.  Every industry has trading cycles, high and low and it is imperative that we not view these results with despondence as things will improve into the future.”

The TBI is an overall indicator of the “health” of businesses trading in the tourism sector.   This is a business tool that can assist particularly independent and small businesses to understand their operating environment, while large businesses are able to us the index to interact with their various stakeholders.  


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Editors Notes

Tourism Business Council of South Africa (TBCSA) is a member-based organisation, made up of Tourism Associations as well as leading businesses operating in the Travel and Tourism sector. The Council seeks to ensure that the industry is unified and speaks with one voice when engaging relevant stakeholders on macro-economic issues affecting the sector.

Sector associations affiliated to the TBCSA are as follows:

1. AHI – Afrikaanse Handelsinstituut
2. AASA – Airlines Association of Southern Africa
3. ASATA – Association of South African Travel Agents
4. FEDHASA – Federated Hospitality Association of South Africa
5. MTA – Medical Tourism Association
6. NAA –SA -  National Accommodation Association of South Africa
7. NOW – National Off-Road Working Group
8. RASA – Restaurant Association of South Africa
9. SAACI – Southern African Association of the Conference Industry
10. SABOA – Southern African Bus Operators’ Association
11. SATSA – Southern African Tourism Services Association
12. SALTHA – South African Leisure, Tourism and Hospitality Association
13. SAVRALA – Southern African Vehicle Rental Association
14. SAYTC - South African Youth Travel Council
15. VOASA - Vacation Ownership Association of South Africa

FNB is a division of First Rand Bank Limited.
An Authorised Financial Services Provider.

Grant Thornton South Africa
Grant Thornton South Africa is a member firm of Grant Thornton International Ltd (Grant Thornton International).  The firm has been operating since 1920 and provides a comprehensive range of services, including assurance, tax and specialist business advice to dynamic organisations – listed companies, large privately held businesses and private equity backed organisations.

We employ approximately 900 people in South Africa with 79 partners and directors.  Grant Thornton has a national presence with offices in the major commercial centres being Cape Town, Durban, East London, Johannesburg, Nelspruit, Pretoria and Port Elizabeth.  South Africa is also a major force in the sub-Saharan Africa network, with member firms in Botswana, Guinea, Kenya, Mauritius, Mozambique, Namibia, Uganda, Zambia and Zimbabwe.

Keywords: Tourism

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