Despite a dip in overall business performance, the Tourism Business Council of South Africa (TBCSA) confirmed the glass remains half full for the travel and tourism industry to grow and contribute to the economy.

The TBCSA released its half-year TBCSA Tourism Business Index (TBI) Report

Overall, the industry experienced lower than normal business performance between January and June 2017, recording an index of 82.7 (100 is normal).  Anticipated business performance for the period July to December 2017 is also expected to be slightly down, recording an index of 80.4. This indicates a slightly less optimistic view of business performance for the remainder of the year.   

CEO, Mmatšatši Ramawela, said: “The report’s results correlate with the outcomes of other recognised business indicators, such as the South African Chamber of Commerce Business Confidence Index, as well as the Rand Mutual Bank/Bureau of Economic Research Business Confidence Index, which both confirm a definite downswing in the economy. 

Two main TBI categories – ‘Accommodation’ and ‘Other Tourism Businesses’ came in well below normal levels. The Accommodation sector recorded an index of 79.1, compared with the anticipated index of 89.3.

Other Tourism Businesses declined to an index of 85.5. However, this is forecast to improve in the second half of 2017 to 91.4. This reflects a below-average, but a slightly more optimistic outlook for a segment of the industry that comprises, among others, tour and coach operators, vehicle rental companies, airlines and travel agents.

Insufficient overseas leisure demand, insufficient domestic business demand and increases in competitive supply are the top three factors cited as contributing negatively to performance. Other reasons include the downturn in the economy, increases in rates and taxes and continued water restrictions.

Gillian Saunders, Deputy CEO and Head of Advisory Services at Grant Thornton South Africa, said the industry was ready to re-align with a renewed sense of purpose.

“Despite the bleak outlook for the remainder of the year, our travel and tourism industry is more than ready, willing and able to play a major role in boosting the country’s economic growth – but it requires an enabling socio-economic and political environment,” she said.

Ramawela added: “The decline we have experienced recently in business performance has the potential to be temporary if the sector, as a collective unit, takes up the challenge to address the underlying socio-political and economic issues that are affecting business and consumer confidence at a broader level.  

The TBI is published by the TBCSA in partnership with Grant Thornton.