Reasons why your Guest House could be under-performing

The SA tourism industry is being pounded on all fronts, with new legislation on unabridged birth certificates and visa restrictions packing the biggest punch, the latest SA Tourism Business Index (TBI) showed.

The TBI for the second quarter of 2015 was released on Monday and showed a newly pessimistic outlook, according to the Tourism Business Council of SA (TBCSA). The TBI is compiled for the TBCSA by Grant Thornton.

The negative contribution factors cited by respondents in the accommodation and other tourism sectors were:

New legislation with regard to biometrics and unabridged birth certificates;
Visa restrictions;
The general state of the economy;
Labour unrest (strikes);
Poor service delivery in terms of electricity and water shortages;
The impact of the Ebola virus;
Reduced demand from government officials;
High utility costs;
High cost of flights, accommodation and car hire;
Xenophobia;
An increase in the cost of fuel.

Respondents’ comments on how the new visa regulations are affecting SA tourism include:

“Visa restrictions are merely turning visitors away from SA to destinations where there are no requirements or can be obtained on arrival. SA is being off-sold and excluded from any in-country marketing efforts. Unabridged birth certificates affecting school tours, especially from northern neighbours.”
“Parents travelling to SA from overseas markets may have to cancel due to time constraints on obtaining documents.”
“This country needs open borders, we need tourists flocking in.”
“Being largely focused on corporate travel, we have seen a decrease of international corporate travel
into the market, as the ability to obtain visa’s to come into South Africa becomes more cumbersome.”
“Negative impact due to great inconvenience and expense for travellers to SA compared to ease of access to other competing destinations.”

Respondents also noticed a decrease in Chinese and Indian visitors.

With regard to other tourism businesses, insufficient overseas leisure demand (54%) continues to be the greatest negative contributing factor to poor business performance.

It is followed by insufficient domestic business demand (40%), insufficient overseas business demand (39%), insufficient domestic leisure demand (38%) and competitor market behaviour (38%).

Among the few positive impact factors named by respondents regarding last quarter, were a weak exchange rate, strong domestic business demand, large summits taking place and long weekends and school holidays.

The BTI shows that overall, the tourism industry performed significantly lower than expected, the lowest performance since the third quarter of 2011, but not as low as in the first nine months of 2011.

The accommodation sector achieved worse than normal business performance and this sector indicated a pessimistic outlook. The TBI shows that second quarter blues are also present among other tourism business.

In the accommodation sector 27.5% of TBI respondents expect less than normal business performance next year and 8.2% expect better than normal business performance.

Among other tourism businesses, 41.4% of respondents expect less than normal business performance next year, while 23.4% expect better results.
In a separate data release, Stats SA said on Monday total income measured in nominal terms (current prices) for the tourist accommodation industry increased by 7% in May 2015 compared with May 2014.

Income from accommodation increased by 6.4% year-on-year in May 2015, the result of a 0.2% decrease in the number of stay unit nights sold and a 6.6% increase in the average income per stay unit night sold.

In May 2015, the types of accommodation that recorded positive year-on-year growth rates in income from accommodation were hotels (7.8%), “other” accommodation (4.6%) and guest houses and guest farms (1.8%).

“Other accommodation” excludes hotels, caravan parks and camping sites, guest houses and guest farms.

The main contributors to the 6.4% year-on-year increase in income from accommodation in May 2015 were hotels (contributing 5 percentage points) and “other” accommodation (contributing 1.3 percentage points).

Income from accommodation increased by 8% in the three months ended May 2015 compared with the three months ended May 2014.

The main contributors to this increase were hotels (9.2% and contributing 5.8 percentage points) and “other” accommodation (6% and contributing 1.8 percentage points).

Carin Smith, Fin24