A comprehensive online survey of businesses across a wide array of tourism sub-sectors indicates that the industry in South Africa will recover to “better than normal levels” in the second half of 2023.

The Tourism Business Index (TBI), an initiative of the Tourism Business Council of South Africa (TBCSA) and compiled by advisory firm BDO, was released at the TBCSA Tourism Leadership Conference held in Sun City from September 6-8.

The TBI provides an indication of the current and likely future performance of businesses, including accommodation operators, tour operators, coach operators, vehicle rental companies, airlines, travel agents, retail outlets, forex traders, conference venues and attractions.

The index measures the health of the industry on a scale from 0-100, with 100 defined as “the level of acceptable business performance in line with the realistic long-term average performance one would hope to achieve, or the long-term average historical performance experienced.”

The TBI found that during the first half of 2023, the industry registered a ‘below-normal’ score of 76. But the outlook is far healthier for the second half of the year (July to August), with an expected ‘above-normal’ performance of 101.

“The TBI results reflect our industry’s challenges for the first half of 2023, with below-normal business performance driven largely by the energy crisis (load-shedding). The accommodation sector has been the worst affected, with high input costs caused by loadshedding and inflation negatively impacting business performance,” explained TBCSA CEO Tshifhiwa Tshivhengwa.

“However, the outlook for the remainder of 2023 is positive, with near ‘normal’ performance expected. The TBCSA is encouraged by data from Stats SA year to date (January to July) 2023 revealing that foreign tourism arrivals for the period have exceeded 2019 and even 2018 (our best year for tourism ever) levels for the same period,” said Tshivhengwa.

Overseas markets still behind

Tshivhengwa stressed that the strong recovery figures were driven mainly by the African market, while the recovery of the high-spending overseas markets was still down by 14% from 2019 levels.

“The impact of the slower recovery rate for the overseas market is significant as this not only impacts negatively on tourism receipts but also on the industry’s ability to increase capacity and recover jobs lost during the COVID-19 pandemic,” he said.

Notwithstanding the skills shortages, 32% of businesses surveyed in the accommodation sector expected to increase employee levels during H2 2023. And 53% of other tourism businesses also expected to increase their staff complements.

“To accelerate the recovery of our industry, specifically the overseas market, tourism stakeholders have indicated that the sector needs significant investment into destination marketing in our key source markets as well as addressing growing concerns around safety and security,” Tshivhengwa added.

Other key findings

• Actual business performance for the consolidated accommodation sector continued to struggle at an index score of 58.4 for H1 2023, which is lower than the corresponding period in 2019 of 67.9. The forecast index for H2 2023 is more encouraging, at 95.7.
• Other tourism businesses recorded stronger business levels relative to the accommodation sector, at 100.7, indicating that the sub-sectors were operating at normal levels for H1 2023. A forecast index of 108.5 is expected for H2 2023.
• The top negative contributing factor was identified as the cost of alternative power supply, with 59% of surveyed accommodation businesses, and 31% of other tourism businesses, selecting this as a major concern.

• Respondents indicated that factors positively influencing outlook for H2 2023 included improved operational efficiencies, strong overseas and domestic leisure demand and the weak Rand exchange rate.