Research on the Performance of the Services Sector

International arrivals

In 2010, the number of international tourists arriving in South Africa was estimated to be 11 574 540¹⁴. Since 2007 the number of international tourist arriving in South Africa has increased by 8.5% annually. The increasing number of international arrivals in South Africa, and the increase in income from the tourism spends has further established the sector as an economic driver. Furthermore the constant increase in the number of arrivals per annum means that the industry creates more jobs in the economy each year and is showing sustainability for future development and growth.

Table 14: International tourist arrivals

Source: Stats SA 2011: South African Tourism 2010

During 2010, the total spends from international tourists visiting South Africa amounted to ZAR 72.6bn. This amount did not include the amount spent on bed nights in South Africa which amounted to ZAR 66.9bn¹⁵. The table provides an overview of the tourist spends of inbound tourists into the destination countries. As can be seen from the table below, South Africa has the lowest revenue generated from tourism, while the USA has the highest revenue. South African tourism generates less tourism than other countries because the number of inbound arrivals in South Africa is much smaller than inbound arrivals in other countries. The reason for the difference in inbound arrivals can be attributed to the distance between South Africa and other countries as well as the limited air access into the country. The difference in the number of inbound arrivals also means that South Africa has the potential to increase the number of inbound arrivals as many people are traveling it is just a matter of attracting them. If South Africa was to increase market access, and number of inbound arrivals, the potential job creation and economic spin off would be significant to the economy as well as the general population.

Table 15: Inbound Tourism Expenditure

Country Name	Year 2008	Year 2009	Year 2010
South Africa	US Dollars ($)	US Dollars ($)	US Dollars ($)
	($)9,178,000,000	($)8,684,000,000	($)10,308,000,000
United Kingdom	($)83,584,000,000	($)61,133,000,000	($)60,469,000,000
USA	($)166,375,000,000	($)147,554,000,000	($)163,887,000,000
Thailand	($)22,497,000,000	($)19,421,000,000	($)23,383,000,000
China	($)44,130,000,000	($)42,632,000,000	($)50,154,000,000

Source: World Bank Indicators http://data.worldbank.org/indicator/ST.INT.RCPT.CD 2011

The tourism industry in South Africa has grown at three times the world average. Between 1994 and 2009 the tourism sector has created an estimated one million¹⁶ jobs in South Africa. Tourism’s contribution to GDP in 2009-2010 was 7.9%. The government is geared towards increasing this to 12% through Asgi-SA initiative and create a further 400 000 jobs. It has been argued that for every twelve tourists that arrive in the country, one new job is created.

The tourism industry in South Africa is extensive and includes a range of services. The Tourism services in South Africa are mostly concentrated within three categories¹⁷:

• 
  Direct suppliers
  
• 
  Support services
  
• 
  Development organizations
  

Direct suppliers are the subsectors that affect the tourist directly, they encompass of; tour operators, transport activities, hospitality and accommodation, and entertainment and experience. The following box provides a detailed definition of these products and services:

Tour operators: are businesses that offer a tour package either through a travel agency or directly to the tourists. These packages may include transports, accommodation, sightseeing or entertainment.

Transport activities: include bus companies, shuttles and taxi services as well as car hire, sea travel, rail transport and air transport.

The accommodation sector: in South Africa is diverse and includes hotels, Lodges, Game Reserves, Backpackers, Guesthouses and Bed& Breakfast as well as self-catering accommodation and resorts.

Entertainment and experience: include a variety of offerings such as cultural and historical heritage, nature resorts and parks, entertainment zones, and casinos.

Support services are services that support direct suppliers such as tourism offices, food services, launderettes and tourism research organizations, and tourism and trade publications.

Development organizations facilitate and promote tourism development and include financial institutions, education facilities and government departments.

Domestic Tourism

The main tourism attractions and hubs for tourism businesses in South Africa are located in Gauteng, KwaZulu-Natal and the Western Cape. Within South Africa, the domestic tourism sector generates more trips annually than international arrivals, and in 2009 domestic travel generated 30 million trips compared to 9.9 million generated by international arrivals. Forty nine percent (49%) of all South Africans travel within the country each year, and on average, South African domestic travellers take 2.1 trips per year¹⁸. However despite the higher number of domestic travellers, international travellers spend more money. In 2009, International travellers spent R 79.4 billion while domestic travellers only spent R 22.4 billion.