Tourism sector can boost African business

Nikki Forster, PwC’s head of Hospitality and Gaming, observed that, although South Africa’s economy had weakened, growth in international travel and tourism and rising room rates had bolstered the hospitality sector. The PwC report projects that by 2018 the overall occupancy rate across all sectors in SA will increase, rising to an estimated 58,4%. Total room revenue is anticipated to reach US$2,68-billion in 2018, a 10,7% compound annual increase from 2013.

“Occupancy rates are expected to increase for hotels over the next five years, overtaking guest houses, bush lodges and guest farms to again become the leading category,” said Forster. Occupancy rates for hotels should rise from 58,9% in 2013 to 71,1% in 2018, while the total number of travellers in the country is projected to reach 17,6-million.

SA’s tourism marketers continue to drive promotional strategies within Africa and further afield. For example, South African Tourism’s recent #MeetSouthAfrica digital marketing campaign went viral and was reinforced by the continuation of 2013’s successful hosting of bloggers, who went on to describe their South African experiences via various social media platforms. In May this year, the organisation again hosted 14 bloggers who were both local and international influencers in the social media space.

Said SA Tourism CEO Thulani Nzima at the time: “South African Tourism has always been known as a leading organisation when it comes to digital marketing, and this year will be no different. We’re looking forward to hosting a new pool of bloggers that are eager to come and meet South Africa, explore our destination and convey what they find back to the world.”

The country was also buoyed by the news in May that foreign tourist arrivals to the country had reached their highest level since 2013. According to Statistics SA, 14 860 216 foreign visitors arrived last year, a 10,5% increase over 2012. Of these, 9,6-million were tourists, translating to a 4,7% year-on-year increase in international (including the rest of Africa) tourist arrivals, and a 7,1% increase in overseas (excluding Africa) tourist arrivals.

Elsewhere on the continent, the PwC report noted that Nigeria’s economy was booming, buoyed in part by regional and international investment. Hotel room revenue in the West African giant rose 59% between 2009 and 2013, while the hotel market in Nigeria grew 9% in 2013, its smallest gain since 2010.

Nigeria, said the study, “will be the fastest-growing market over the next five years, with a projected 22,6% compound annual gain. Growth will be facilitated by an increase in available rooms and large gains in [overnight stays] fuelled by a booming economy. However, recent terrorist activity in the country may impact negatively on future prospects.”

Conversely, hotel room revenue in Mauritius decreased by 8,7% in 2013 but is projected to grow at 4,6% compounded annually to 2018, according to PwC.

In East Africa, Kenya’s hotel market declined during the past two years, largely due to terrorist concerns, falling 6,6% in 2012 and an additional 2,6% in 2013.

Overall, the report painted the following picture of the markets it covered: “Nigeria is principally a business destination with relatively little holiday tourism. Mauritius is principally a resort market with most travellers coming on holiday. Five-star hotels constitute a significant component of available rooms and total spending in Mauritius. Kenya attracts eco-tourists and offers safaris and beaches, but is currently challenged by terrorism that is discouraging visitors.”

The report continued: “These differences are reflected in spending patterns. As a resort market, Mauritius is affected more by international global economic conditions through its impact on disposable income and competition from the Maldives, Sri Lanka and Seychelles – which compete for the same market.”

South African news website IOL quoted Forster as saying that, in spite of the difficult times faced by the hospitality industry since the global economic downturn in 2008-2009, growth in South Africa and key African markets remained solid.

“There is so much economic activity happening in Africa, especially West Africa – and, yes, people will be travelling directly to these countries – but South Africa will still be a hub,” said Forster. “SA is more stable compared to many countries in Africa even though we have strikes. In West Africa there are new hotels … the whole place is full of construction, but South Africa has to ensure that it continues to capture its market.”