STATE OF TOURISM: AN ANALYSIS OF THE IMPORTANCE OF TRANSPORT TO TOURISM
The National Department of Tourism recently released its latest series of the State of Tourism Report. The report aims to inform government, industry decision makers and businesses about the performance of the Travel and Tourism sector. It also provides a holistic view of the sector’s operating environment, whilst taking into account challenges and opportunities associated with external factors affecting the sector and country.
In our final analysis of the report this week, we focus our attention on the topical issue of transport by sharing an analysis of South Africa’s Tourist Transport Services, drilling down on the airline and car rental industries respectively:
The importance of transport to tourism:
According to Stats SA’s 2015 Tourism Satellite Account, 96% of air passenger transport; 54% of water transport and 37% of road transport is generated by tourism-related demand. This indicates that transport as a service sector plays a critical role in tourism and highlights the importance of the regulation, safety and accessibility of the passenger transport sector.
The Airline Industry:
- Airports Company South Africa (ACSA) report that they received 284 285 arriving aircraft in 2015/16 and 280 707 in 2016/17; indicating an annual decline of 1.3%.
- The entry of low cost airlines continued to shake up the industry and the increase in capacity scheduled flights on high volume routes is also leading to increased competition. This means that demand for local flights at low prices will continue.
- Also, new code share agreements between local low-cost carriers are underway between key cities in South Africa. Effectively, the industry is becoming more aggressive, which impacts the costing, offering, and technology provided by the airlines to be more competitively promoted
- Currently, the industry is experiencing a number of influencing factors that include less restrictive bilateral air service agreements (that allow for competitive pricing); the weakening rand, the introduction of new generation aircrafts, and the emergence of the three main gulf carriers
The latest: IATA announces results of its latest airline business confidence survey
In the week, the International Air Transport Association released results of its latest business confidence survey of airlines, CFOs and heads of cargo. Key points from the survey are:
- 87% of respondents believe that the profit outlook will be unchanged or improve over the year ahead, supported by ongoing robust demand; none of this quarter’s survey respondents expect to see a reduction in either their passenger or freight volumes over the next 12 months.
- The outlook for industry employment over the next 12 months remains positive, with more than 40% of respondents expecting to increase employment and a further 28% expecting to maintain current levels.
Click here to view more key findings from the survey
The Car Rental Industry:
- The car rental industry is an important service component in the Tourism and Transport sectors, with 68% of transport equipment rental income generated from tourism demand expenditure. According to the Travel and Tourism Competitiveness Index of 2017, South Africa ranks 51st on the globe (and 1st on the continent) for the presence of major car rental companies.
- According to SAVRALA, there were over 16.9 million rental days in 2016, translating to a 7% increase from 2015. Also, there was an increase of 5.5% in 2016 in the average fleet size (64 709).
- Retail value sales of SAVRALA car rentals in South Africa grew by 12% in 2016, culminating to an amount of R5.3bn.
- Stakeholders within the car rental industry stated that corporate bookings rely on long-standing relationships between the companies and rental services, emphasizing the importance of reputation for car rental companies. However, leisure-related car rental sales bookings are predominantly influenced by the average rental fees. Stakeholders also emphasised that research needs to be undertaken to understand the impact external influences such as Uber have on the car rental industry.
A snapshot: The size of our sector
The NDT in partnership with SA Tourism have developed a national tourism database listing a number of tourism products and services. Although not fully comprehensive, the database gives an accurate overview of the spread of tourism related products and services throughout South Africa. Some key findings from the database reveal:
- There are currently 61 941 listed tourism products in the database (as of December 2016)
- Accommodation (at 46.7%) makes up the majority of the supply side of tourism services and products. This is followed by Attractions (at 27.7%), Restaurants (at 8.3%), Shopping (at 5.5%) and Transport (at 3.1%)
- The majority of tourism products and services in the database are located in the Western Cape (at 33%), followed by Gauteng (at 20%) and KwaZulu-Natal (at 14%).
Click here to view the State of Tourism Report 2015/16