Tourism industry optimistic despite depressed economy

The local travel and tourism operators remain somewhat optimistic of an improvement in business performance levels for the next quarter of 2011, in spite of prior performance expectations not having been met. However, 2012 performance is still not expected to reach normal performance levels.  This is according to the results of the third quarter edition of the TBCSA FNB Tourism Business Index (TBI).

The TBI is an initiative of the Tourism Business Council of South Africa (TBCSA), sponsored by First National Bank (FNB) and compiled by Grant Thornton.  The index provides a national indication of the current and future performance, across the various businesses operating within the South African travel and tourism sector.

For the third quarter of 2011, the TBI registered a performance index of 70.0 against a normal of 100.  Although this lower actual performance is indicative of the current tough trading conditions, operators continue to expect an improvement in the performance going forward with the next quarter TBI forecasted at 84.9.

TBCSA CEO Mmatsatsi Marobe says business does have a reason to remain cautiously optimistic: “Looking at the latest results, there are facets of the sector which are seeing better prospects, for instance in this quarter conference businesses are reporting improved performance levels.”

Once again, other tourism businesses, such as tour operators, activities and attractions, travel agents and FOREX operators indicated a higher performance level than the accommodation sector.

“There are always silver linings and opportunities in every phase of the economic cycle,” says Gillian Saunders, head of advisory services at Grant Thornton. “Announced hotel closures are transpiring into sales, where investor operators are able to buy assets at a good price. Other brands can expand their footprint, taking on distressed independent properties. This type of activity underlines the long-term potential and confidence in the industry despite the current poor trading performances.”

Pieter de Bruin, head of industry sales at FNB adds: “No one predicted a perfect storm to hit the world economy and the tourism sector is particularly impacted by economic realities, as both leisure and business tourism have affected the way people travel. Every industry has its cycles and we should not always be nervous in down cycles. It is important to keep abreast of the developments in the sector by utilising the Tourism Business Index as an information tool."

The TBI is an overall indicator of the “health” of businesses trading in the tourism sector. This is a business tool that can assist particularly independent and small businesses to understand their operating environment, while large businesses are able to us the index to interact with their various stakeholders.

The index will be available for download on the TBCSA website or The next TBI report will be published in January 2012.

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