Finweek_English_Edition_-_March_19,_2020__

36 finweek 19 March 2020 http://www.fin24.com/finweek

cover story travel and tourism

* Adding Tsogo Sun Gaming and Tsogo Sun Hotels together.

** Recently listed and no data over three years.

Data as on 4 March 2020.

SOURCE: IRESS SOURCE: Stats SA

GRAPH 1: SHARE PRICE MOVEMENT OF SELECTED JSE-LISTED STOCKS GRAPH 2: ORIGIN OF OVERSEAS TOURISTS DURING 2019

Government’s hope for tourism lacks

financial backing

Tourism’s contribution to SA’s total economic

output, or GDP, was estimated at 8.6% in 2018,

according to the World Travel and Tourism

Council’s latest estimate for the country. The

sector’s contribution to direct and indirect

employment was about 1.5m jobs – or 9.2% of

total formal employment – the council estimates.

The government has pinned some of its hope

on the R425.8bn industry as a potential growth

engine for our beleaguered economy. According

to the National Development Plan, tourism is

touted as one of the sectors that could boost the

economies of rural districts (see sidebar on how

government plans to boost tourism on p.38).

In this vein, in his Medium-term Budget

Policy Statement in October last year, finance

minister Tito Mboweni included the tourism

sector as one of the potential drivers of future

economic growth, and the Budget Review,

which accompanied Mboweni’s February

Budget speech, stated that government wishes

to support “labour-intensive sectors such as

agriculture and tourism”.

This, however, is paid lip service in the final

budget.

The National Assembly’s portfolio committee

on tourism recommended that Mboweni,

“notwithstanding the constrained national fiscus,

consider the contribution of the tourism sector to

the gross domestic (GDP) of the country and the

labour-intensive nature of the tourism sector and

find innovative ways of increasing the budget

appropriated for the Tourism vote”, according to

the Budget Review for 2020.

National Treasury’s response was that it

recognised tourism’s important contribution

to GDP growth, but that there was little scope

to provide additional funding at the time of the

budget being announced by the finance minister.

Mboweni has allocated R2.481bn to the

national tourism department for the fiscal year

starting on 1 April compared with the R2.392bn

for the current book year – an increase of 3.7%,

lower than consumer price inflation. The new

fiscal year’s allocation equals 0.13% of total

budgeted government expenditure compared

with the Seychelles’ 0.65% and Namibia’s 0.74%,

according to both countries’ budget documents.

A snapshot of the local business

environment

In the meantime, the locally-listed players must

deal with stagnant or declining occupancy rates

at their hotels.

Occupancy rates at Tsogo Sun Hotels rose to

62.7% in the six months through 30 September

last year – a 0.7 percentage points increase

from the comparable period a year earlier,

according to its interim results. City Lodge

Hotels reported a drop in occupancies to 57%

in the six months ending 31 December – this

is compared with 61% for the comparable

period a year earlier, according to its financial

statements for the period.

Sun International didn’t report its total

interim occupancy rates, but the company’s SA

room revenue declined R7m, or 1.5%, for the

six months through the end of June last year,

its interim statement shows. Room occupancy

at Sun City dropped by 10 percentage points

as the aftermath and repairs of the December

2018 hailstorm gnawed arrivals.

As room occupancy stagnated or declined,

the car rental industry had a mixed bag of

The new fiscal year’s

allocation equals

0.13%

of total budgeted government

expenditure compared with

the Seychelles’ 0.65% and

Namibia’s 0.74%, according to

both countries’ budget documents.

Tito Mboweni

Minister of finance

REGION 2019

■ Europe 1 556 452

■ North America 440 271

■ Asia 311 371

■ Australasia 128 153

■ Central and South America 120 380

■ Middle East 55 532

TOTAL 2 612 159

60%

17%

12%

5%

5%2%

■ % Change 3 years ■ % Change 1 year

Sun

International Tsogo Sun* City Lodge Comair Motus**Barloworld

Hospitality

Property

Fund

30

20

10

0

-10

-20

-30

-40

-50

-60

-70

-80

-63.49

-49.38 -51.27

-67.57

-46.43

-56.52

17.31

-8.58 -14.28

-22.52

-34.03 -32.57

-45.27

-59.8

-35.45

Bidvest