Strategic solutions

2013 ends positively as Q4 Tourism Business Index consolidates a good year

The 2013 fourth quarter results of the TBCSA FNB Tourism Business Index show that the industry experienced another good quarter with an above average performance of 114,6 against the 110,8 it expected. This positive result consolidated a year in which only one quarter, Q2, saw performance marginally below normal.

The Tourism Business Index (TBI) is compiled quarterly by Grant Thornton for the Tourism Business Council of South Africa (TBCSA), and it covers the tourism accommodation sector, transport, attractions, meetings and conferencing and attractions.

Mmatsatsi Ramawela, CEO of the TBCSA, said that they are pleased with the TBI results. “The fourth quarter has closed 2013 on a high note which is rewarding for an industry that has struggled since hosting the 2010 Soccer World Cup. It’s pleasing to note that the TBI results complement the results of Stats SA’s accommodation survey released recently, which shows strong performance from tourism accommodation in various categories.”

Ramawela said the results were a sure sign of the resilience of tourism in South Africa as it is reflected globally. “Tourism stands out against the ongoing economic woes affecting other economic sectors globally.”

Gillian Saunders, Head of Advisory Services, Grant Thornton, said: “At the end of Q3 we were pleased that an upward trend had increased confidence for the Q4 expectation. Now we’re delighted to see that the industry outpaced its own optimistic expectation.”

The latest survey reveals that in Q1 2014 the industry expects to achieve a better than normal level of 111,3. The survey splits respondents into two sub-indices: Accommodation and Other Tourism Businesses (tour and coach operators, vehicle rental, airlines, travel agents, retail outlets, forex traders, conference venues and attractions).

Other Tourism Businesses showed strong better than normal business conditions in Q4 2013 with 117,2 compared to the expected 111,4, influenced largely by positive performance from car hire, conference centres, tour operators and retail respondents. Throughout the life of the survey, Other Tourism Businesses have shown a more positive outlook and this edition bears out that trend. They remain confident that Q1 2014 performance will be better than normal at 114,4.

“We are pleased that the TBI results reveal a strong performance from Other Tourism businesses, which reflect the strong performance that is necessary heading into 2014”, said Ramawela.

Accommodation virtually achieved their expectations with an index of 110,8 in Q4 2013, compared to the expected level of 110,0 . “The Accommodation sector is very good at predicting performance,” said Saunders. “They expect to achieve 107,3 for Q1 2014 and it will be interesting to see how prescient they are!”

When looking at 2014, on balance the accommodation respondents have a negative outlook (-22,4%) which continues their more pessimistic longer-term concerns shown in the prior editions. Since the inception of the index the Accommodation sector has only once had a positive outlook for the next year and this was in Q1 2013. Despite trading conditions having improved to normal levels since late 2012, longer term confidence has not returned to this sector. Contrast this with the Other Tourism Businesses sector which is, on balance, significantly more positive with +28,4% outlook for 2014.

The majority of respondents in both sectors indicate that their employment levels will stay the same so we can expect overall employment growth to remain muted into the future. The accommodation sector is indicating some contraction in employment with a negative balance of -19.4%. Capacity expansion remains positive in terms of the Accommodation Sector and Other Tourism Businesses, with both expecting a positive balance for Q1 2014. The Accommodation sector anticipates a weak positive balance of +5,4% while Other Tourism Businesses anticipate a strong positive balance of +40,7%.

This report considers both positive and negative factors which possibly have an impact on the performance of the industry.

Q4 2013 negative factors cited by the industry include:

  • For the 6th consecutive quarter, cost of inputs remains the most cited negative contributing factor for business performance for Accommodation (56%)
  • The cost of labour continues to feature as a growing concern with an average of 24% of all Accommodation Business respondents (from inception of the index to date) indicating it as an impediment to business performance
  • 30% of respondents cite insufficient overseas leisure demand as negatively impacting business performance
  • Competitor market behaviour continues to be cited as one of the major negative factors affecting business performance for the Other Tourism Businesses (31%)
  • Noted contributing influences mentioned in relation to Other Tourism Businesses (40%) include the impact of the increase in the price of fuel, motor industry strikes affecting delivery time, supplier incompetence, lack of marketing, poor road infrastructure, political influences as well as the impact of Nelson Mandela’s death
  • Overall, both Accommodation (20%) and Other Tourism Businesses (26%) said they experienced insufficient domestic business demand during Q4 2013


Q4 2013 positive factors cited by the industry include:

  • A weak exchange rate was cited as a significant positive contributing factor for both the Accommodation and Other Tourism Businesses at 38% and 52% respectively
  • Positive influences during Q4 include business development/improvement and increased marketing efforts


“Times are tough for both businesses and consumers as we go into 2014, however, the tourism industry can look forward to benefitting from the weak currency through improved arrivals from some of our key source markets in Europe, USA and UK.” concludes Ramawela