BMI's Executive Summary

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Tourism Overview

BMI believes that South Africa recorded another favourable year in the tourism sector in 2007. Following buoyant growth in foreign tourist arrivals of 14% year-on-year (y-o-y) to nearly 8.4mn in 2006, the latest data for the period January to August 2007 show that arrivals were up a strong 9.5% y-o-y to almost 5.9mn. In the hospitality sector, the total number of tourist (foreign and domestic) room nights in all accommodation establishments was up a reasonable 4.6% y-o-y to over 4.4mn nights in Q207, in the wake of a 3.7% y-o-y increase in Q107. Occupancy rates in all accommodation establishments in Q207 also showed an improvement, standing at just over 48%, which was up 5% y-o-y.

Source Markets

Of foreign tourist arrivals in the first eight months of 2007, arrivals from African countries once again showed strong growth, up nearly 11% y-o-y. The growth rate in arrivals from Europe was a more modest 3.6% y-o-y, with especially strong growth in arrivals from France, up 12% y-o-y to 74,000, although tourists from the UK (which account for over one third of all European arrivals) were up just 3% y-o-y to 310,000. Arrivals from Germany, meanwhile, declined nearly 2% y-o-y to around 144,000. After strong growth rates in 2006, tourist arrivals from both North America and Asia were up an equally strong 9% and 13% y-o-y respectively.

Forecast Scenario

While gentler economic data and more downbeat business confidence indicators suggest the potential for a moderation of growth in the South African economy, we still only envisage a mild slowdown vis-à-vis 2006. Recent economic data support our broadly sanguine view on the path of the economy. All in all we stick to our 2007 real GDP estimate of 4.7%, slowing to 4.5% in 2008. BMI foresees steady growth in foreign tourist arrivals in both 2008 and 2009, supported by a fall in the value of the South African rand against the euro and US dollar (we forecast an average exchange rate of ZAR8.04/US$ in 2009). This should boost total arrivals to around 10mn in 2009, with international tourism receipts reaching some US$10bn in the same year. In 2010, we expect growth in tourist arrivals and tourism receipts to pick up sharply, as the country hosts the FIFA World Cup.

South African Airways

During the financial year ending March 2007, South African Airways (SAA), the national airline, recorded a net loss of ZAR883mn, which was a marked deterioration compared with the previous year.

2010 FIFA World Cup

Although the country met its original funding target of US$2bn for the 2010 FIFA World Cup, underlining investor confidence in the nation's ability to host the tournament, costs have since escalated. The government recently stated that the cost of hosting the World Cup was expected to escalate by between ZAR2.8bn and ZAR3.4bn, and indicated that controlling rising costs was a key challenge for government. Based on these higher cost projections, the overall cost of the 2010 World Cup projects, including stadia and surrounding transport, is now estimated at ZAR20.8bn (around US$3bn).

Chapter 1 - New This Quarter

New tourism grading board appointed

The ‘World Cup’ effect

Core Forecasts

Special Report: Crime

Table: South Africa Tourism SWOT

Chapter 2 - Market Overview

Tourism Outlook

Table: South Africa - Tourist Arrivals (Jan-Aug 2006)

Looking to Japan

Domestic tourism

Table: SA Foreign Arrivals By Region (2005)

Table: SA Travel Industry – Historical Data And Forecasts

The ‘World Cup’ Effect

Table: Key Tourism Source Markets Likely To Participate In The 2010 World Cup*

Government stepping in to help industry

Table: Number of beds required in each host city for FIFA 2010 World Cup games

Table: SA Tourism Industry – Historical Data And Forecasts

Chapter 3 - Macroeconomic Forecast

Table: Economic Indicators

Chapter 4 - Travel

Commercial Airlines

Improving airport infrastructure

Low Cost Airlines

Special Focus: Jet Fuel Costs

Table: Oil Price Forecasts

Car Rental

Chapter 5 - Hospitality

Accommodation

Table: Structure Of Accommodation Market

Casinos

Table: Key Players – SA Hotel And Gaming Industry 2003 (US$mn)

Game Lodges

Chapter 6 - Special Report: Crime

Tourism Business Environment Rankings

Middle East And Africa – Tourism Business Environment Rankings Matrix

Long-Term Political Risk

Country Business Environment

International Tourism Receipts

Visitor Arrival Growth

Investment Environment

Shock Factor

Chapter 7 - Regional Case Study – Accor

Key Statistics:

Table: Accor Hotel Business in Selected Middle East and Africa Countries

Chapter 8 - Company Profiles

South African Airways (Pty) Ltd (SAA)

Sun International

Southern Sun

Chapter 9 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Tourism Industry

Sources

Competitive Landscape for Middle East & Africa Tourism Reports: Sample of Companies Ranked

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Comparative cross-border analysis assessing business and regulatory factors to rank Asia’s most competitive tourism markets. Indicators used include Political Risk, Business Environment Risk, Forecast International Tourism Receipts, Visitor Arrival Growth, Investment Environment and Shock Factors (taking account of any special factors such as terrorism, natural disasters and disease). Company SWOTs for leading resort, hotel, airline, travel and tourism operators in each market, including competitive intelligence on overall geographic presence, competitive positioning and relationships with international operators; % share of operator markets; % share of international arrivals and departures; % share of busiest domestic routes; main products and services; panregional expansion, merger and acquisition strategies.

Network of Middle Eastern & African Tourism Sources

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BMI's Middle Eastern & African Tourism Reports are based on an extensive network of multilateral organisations, government departments, tourism industry associations, chambers of commerce and company reports. Information sources include: