Tourism tumble sure to lead to job losses – expert
Cape Town – A dramatic decline in foreign tourists will have far-reaching implications for SA, including job losses, warns an expert.
Recent figures released by Statistics SA for the first quarter of 2015 show South African tourism is in crisis, with a 6% drop in total foreign tourist arrivals.
“A loss of this magnitude in foreign tourist arrivals is unprecedented. We have never seen such dire levels of decline in the last 21 years of our tourism history,” said Lee-Anne Bac, director, advisory services at Grant Thornton.
“There will most definitely also be job losses especially in niche tourism operators that focus on specific foreign tourism markets, i e China and India,” said Bac.
Other far-reaching implications resulting from this dramatic decline include a price squeeze as tourism product owners fight for a shrinking foreign tourism market and a price sensitive domestic market.
Bac said that during the first quarter of 2009, when the world was in deep recession, South Africa recorded a 2.5% drop in tourist arrivals. “When comparing our recessional years to our current situation, it’s a big shock.”
South Africa has rarely experienced any decline in tourism arrivals since 1994. Small declines were recorded in the first quarter of 2004 (-0.8%), and arrivals slipped 0.6% during the first three months of 2001.
“Based on global tourism forecasts for 2015, South Africa should not be experiencing these levels of decline,” said Bac. “South Africa appears to be bucking the global trend at the moment.”
What makes it even worse is that the decline happened at a time when the weak rand should have encouraged foreign tourism. Direct spend lost to the SA economy because of the tourist tumble is estimated at R1.6bn, which excludes the levels of growth South Africa should have experienced during the same period.
“If we had experienced modest growth of 5% for the quarter, then the total number of foreign tourist arrivals to end March 2015 would have been 2.6 million. So, if we include the expected growth expectations in our estimations, South Africa actually lost 265 000 foreign tourists (and not 150 000) in the first three months of the year.”
This means the loss of foreign direct investment would have been R2.8bn, according to Bac.
Factors deterring tourists from travelling to SA include the Ebola pandemic in West Africa, economic decline in some source countries and implementation of confusing new visa regulations.
For the first quarter of 2015, there was a decline in foreign tourist arrivals from the majority of overseas markets to South Africa. Tourist arrivals from the UK bucked the overall trend, showing an increase of 5% for the quarter.
Overall, tourist arrivals from overseas markets declined by 6.8% during the first quarter of 2015 according to Stats SA data, with big drops recorded from Russia (down 47%) and Brazil (down 34%).
China is down 38%, even though the first quarter includes the Chinese New Year which is a time when the Chinese normally travel extensively, while India showed a 13% decline.
Tourist arrivals from Africa dropped 5.6% in total with significant declines from Nigeria (down 15%) and Uganda (down 19%).
The xenophobic attacks which flared up in SA towards the end of the first quarter are not to blame, said Bac, since they did not form part of the period under review. However, new regulations requiring foreign tourists who need visas to appear in person and submit biometric data most definitely played a part.
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