S.Africa’s Q2 tourism business index dips - CNBC Africa

S.Africa’s Q2 tourism business index dips

Southern Africa

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The index's actual performance was worse than expected at 94.7. PHOTO: Getty Images

“The latest report showed a score of 94.7 across April, May and June, indicating performance just below normal, and almost 18 points below January to March’s 112.4 index reading,” the Tourism Business Council of South Africa (TBCSA) said in a statement.

“The industry had already shown an expectation of a dip with a projected 103 performance, but actual performance was somewhat worse than expected at 94.7.  Expectations for quarter three are at about the same level at 98.”

The Tourism Business Index comprises of the accommodation sub-indice and the other tourism businesses accommodation sub-indice.

The accommodation index focuses on establishments such as guest houses and hotels, whereas the other tourism businesses sub-indice includes tourism transport sector, travel agents, retail outlets, conference venues, attractions and forex traders.

(READ MORE: S.Africa's tourism index down but conditions still favourable)

“A score of 100 is regarded as the normal trading climate. The lower reading emanated mainly from the ‘Other Tourism’ business segment, excluding accommodation, which includes travel agents, transport operators and conference centres. ‘Other Tourism’ businesses achieved a score of 86.2 points only,” the TBCSA explained.

“Meanwhile the accommodation sector still performed better than normal achieving an index of 105.8, although it is down from the 116.1 score which was registered in the first quarter, but slightly ahead of the forecast performance index of 103.”

Despite the positive performance, the TBCSA is concerned about other factors that could be barring growth within the industry.

(READ MORE: Growth in tourism sector undermined by S.Africa's new visa laws)

“The biggest challenge facing many tourism businesses remains the rising cost of doing business which can also be attributed to government legislation, regulations and input costs as 44 per cent of TBI respondents cited,” said TBCSA CEO Mmatšatši Ramawela.

“Insufficient domestic and international leisure demand, especially from South Africa’s key source markets also featured heavily as constraints on performance.”

Both the accommodation sector and other tourism businesses nevertheless continue to have a positive outlook for the year ahead. This is in light of South Africa’s Business Confidence Index, which had marginal growth in June.

“Essentially, the tourism business index is telling us that the improved trading conditions in the tourism sector have receded somewhat and that challenges remain, but the fundamentals for tourism are still good,” Ramawela added.