Research on the Performance of the Services Sector

Main Growth Areas

Marketing and promotion of tourism products to domestic residents of countries as well as to foreign markets will increase the number of tourists globally. Eco-tourism represents an opportunity with development potential as more people around the world become environmentally friendly and aware of the need for sustainable and environmentally friendly tourism products. This form of tourism can also be linked to Educational tourism which presents another product in tourism which can be developed internationally. The promotion of student travel and cultural tourism experiences and packages represent an international growth opportunity and educational tourism can include the following¹²:

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  School trips
  
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  Alternative Spring Break Travel Experiences
  
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  Study Abroad Experiences
  
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  Seminar Vacations and Senior Seminars
  
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  Skill Enhancement Vacations
  
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  Educational Cruises
  

Focusing on marketing of Sports tourism is another opportunity for growth as international sporting events attract both players and spectators to events and this in turn leads to an increased demand for tourism activities, products and services.

Key Problem Areas

The key challenges that international tourism faces includes:

Economic recessions- fluctuations in the economy affect buying power and disposable income, and so the less money people have the less likely that they will travel.

Increased competition- the supply of tourism offerings is vast and often surpasses the demand, the competition to attract tourists is fierce.

Rising fuel costs will affect tourism across the globe, as the foundation for all tourism is transport. Once transportation costs rise, all other costs increase.

Increasing tourism volume and expenditure- by increasing the number of tourists visiting a destination, the expenditure increases and improves the local economy; however with so much competition in the industry it is difficult to increase tourism volume into an area.

Natural disasters affect tourism drastically; this was the case in 2010 and 2011 when Europe experienced volcanic eruptions and Asia experienced floods and earthquakes. Economies were affected and transportation modes were disrupted.

In order to have a comprehensive understanding of the performance of this sector it is critical to look at the recent development trends both at foreign and domestic tourism performance closer at the national level.

Foreign Tourism Sector in South Africa

Foreign tourism has contributed positively to the growth of the South African tourism sector particularly in terms of the total contribution to tourism revenue. According to tourism SA (2011), inmid-2010, tourist arrivals reached a record high of 8, 1 million representing a 1,061,687 increase from arrivals to the country in 2009. The South African sector experienced a15.1% growth in tourist arrivals and it outperformed global tourism which only grew by 6.7% in 2010. This growth was largely attributed to the county’s hosting of the 2010 FIFA World cup in June and July 2010. Foreign tourism spends in South Africa accounts for the majority of the tourism revenue for the country. The total spend/yield from international tourists in 2010 amounted to R 72.6 billion, while the total domestic tourist direct spend for the same period was R 21.1 billion¹³.

Source of Markets

Africa remains the largest market for the South African foreign tourism, international tourist arrivals stood at 651,753 in 2010 showing a growth of 12.9% over 2009. Both air markets and land markets grew on the same period, with the former recording a 14% growth while the latter grew by 12.8%. The neighbouring SADC countries forms the top five major market sources as shown on figure 2 below:

Figure : Top 20 Source Markets

Source: Stats SA, Tourism and Migration Release, SAT Analysis

According to Tourism SA, the UK, USA, Germany, Netherlands and France remain the major top five overseas source markets. In 2010, the America’s region grew by 37. 8%, Europe recorded 8.1% growth, while Asia and Australasia grew by 34.6% in the same year (Tourism SA, 2011). It is important to note that growth took place from all regions (source of markets) which indicate a greater development potential for this sector.

The figure below shows tourist arrival to South Africa by Region:

Figure : Tourist Arrivals to South Africa by Region in 2009 and 2010

Source: Tourism SA, Highlights of 2010 V5, 2011

Americas and Asia & Australasia recorded the highest growth in 2010 by 37 .4% and 34.6% respectively. This growth implies potential foreign market growth areas for tourism in the future. The Gauteng and the Western Cape have over the years been considered the most visited provinces in the country and account for the bulk of the bed nights spent in South Africa. In 2010, Gauteng and the Western Cape accounted for 67% of the total bed nights spent in the country. While this provides strong evidence implying that the bulk of tourist based products and services are concentrated in these regions there is currently no hard data to back this up.

Figure : Provincial distribution of bed nights 2009-2010

Source: 2010 Cape Town & Western Cape Destination Performance, CTRU 2012

Gauteng had the highest number of bed nights for 2009 and 2010, and accounted for approximately 37% of bed nights in the country. Western Cape had the second highest total and accounted for 30% of the bed nights spent in South Africa for 2009 and 2010. KwaZulu-Natal had the third highest total of bed nights with 9% of the bed nights in South Africa spent in the province for 2009 and 2010. The province with the lowest number of bed nights was the Northern Cape with only 1% of the total bed nights spent in South Africa for 2009 and 2010. The province with the highest growth in bed nights between 2009 and 2010 was the Western Cape with a 27.4% increase in bed nights, followed by the Eastern Cape with a 25.6% increase in bed nights for the same period. The province with the smallest growth rates in bed nights was the Northern Cape with a 0.1% increase. The above results imply that even though tourism concentrated areas such as the Western Cape, Gauteng etc, there is still potential to further grow and develop the sector in other parts of the country, and therefore necessitates the strengthening of existing support and strategies to tap into the latent potential in tourism development and investment opportunities in these areas.