South Africa Tourism Report Q2 2009

Tourism Overview Data for 2008 show that the growth rate in foreign tourist arrivals continued to slow compared with that recorded in the previous two years. The number of foreign arrivals was up 5.5% year-on-year (y-o-y) to almost 9.6mn. The most important source regions for South African tourism, Africa and Europe, reported a mixed picture, with arrivals from Africa up 7% y-o-y, while visitors from Europe declined 0.5% y-o-y.

Arrivals from North America, meanwhile, rose over 4% annually, but the number of Asian visitors fell nearly 8% y-o-y. Arrivals from Australasia, Central and South America, and the Middle East, all recorded relatively strong growth rates. Within Europe, tourist arrivals from the UK (which accounted for over 34% of all European arrivals) fell 2.5% y-o-y, while German visitors declined a sizeable 6.5% y-o-y, and visitors from France were up a strong 11.2% y-o-y (after growth of almost 9% y-o-y in 2007). Looking at data for the month of December 2008 however, apart for Central and South America, Middle East and Africa, all the other regions recorded negative y-o-y growth in arrivals. Indeed, the number of visitors from Europe was down over 5% compared with the same month in 2007.

Hospitality The latest official estimates on the total number of tourist (foreign and domestic) room nights in all accommodation establishments show that there were 20.6mn nights in 2008. This represents a relatively favourable increase of 6.7% compared with around 19.3mn room nights a year earlier. BMI estimates that hotel occupancy rates averaged some 59.9% in 2008. As we had forecast, this was slightly lower than in 2007 (just under 62%).

Forecast Scenario BMI continues to maintain that the growth rate in foreign tourist arrivals will remain slightly positive this year (although revised down marginally this quarter). The outlook is set against a background of further downward revisions to our economic forecasts in major source markets but alongside expected continuing positive growth in arrivals to South Africa from the rest of the African continent. In 2010, we expect growth in tourist arrivals and tourism receipts to pick up sharply, as the country hosts the FIFA World Cup and economic recovery takes place in key source markets.

2010 FIFA World Cup In January 2009, FIFA announced that progress on the stadia for the 2010 World Cup was proceeding well. Tickets for the tournament went on sale in February, with tickets available in four categories - category one offering the best seats in the stadia, while category four tickets are the most affordable and are also exclusively available to South African citizens. In a negative comment, however, FIFA once again emphasised the need for more robust and visible promotion of the World Cup in South Africa.

Sun International In its business update for the six months to December 2008, Sun International achieved overall revenue growth was 6% compared with the same period a year earlier. Casino and room revenues grew 5% and 13% y-o-y respectively. Due to declining disposable incomes, the rate of growth of gaming revenue continued to slow, recording an increase of just 2% y-o-y. The average room occupancy rate for the half year stood at 77%, down from 80% in the corresponding period of 2007. The outlook for the company's casinos in South Africa remains subdued, with worsening global economic conditions likely to have a negative impact on hotels and resorts in the second half of the year.