South Africa's Travel & Tourism Set to Boom

A Sector Driving South Africa’s Economic Performance

By Jessie Taylor

The South African Travel and Tourism sector’s growth is expected to outpace the national economy over the next ten years. This makes it a key sector to drive the national economic recovery over the next decade.

Despite experiencing a sharp decline during the global pandemic, South Africa’s tourism sector is showing signs of strong growth, and has the potential to sustain job opportunities and drive the country’s economy.

Economic Driver

The World Travel and Tourism Council’s Economic Impact Report forecasts that the South African Travel and Tourism sector is expected to grow at an average rate of 7.6% annually over the next decade. This growth is significantly more than the 1.8% growth rate of the country’s overall economy.

According to the National Treasury’s forecasts, South Africa’s economy is expected to grow by 0.9% in 2023 and will recover slowly to 1.8% by 2025.

This rate of economic expansion is well below the pace required to generate significant employment growth and support national development, the Treasury has said.

Tourism currently contributes just short of 4% to South Africa’s GDP more than the agriculture, utilities and construction sectors. By 2032, the tourism sector’s contribution to GDP could reach more than R554.6-billion (7.4% of the total economy), injecting nearly R287-billion into the national economy, the World Travel and Tourism Council’s Economic Impact Report suggests.

By the end of this year, Travel and Tourism’s contribution to GDP is expected to grow 37.2% year on year to nearly R268-billion (4.3% of total economy). The sector is an important driver for job creation across the world (globally, one in 10 jobs were created in the industry in 2019) and is no different in the local context.

The majority of tourists to South Africa (95,3%) come for holidays. Direct jobs include employment by hotels, travel agents, airlines and other passenger transportation services (excluding commuter services). It also includes activities of hospitality, restaurants and leisure industries directly supported by tourism.

Travel and Tourism is expected to create more than 800 000 jobs over the next decade, to reach more than 1.9 million by 2032, according to the World Travel and Tourism Council’s Economic Impact Report. Employment in the sector is set to grow by 3.8% to reach more than 1.1 million jobs by the end of this year.

Recovering From The Pandemic

Lockdowns and travel restrictions imposed by countries during the COVID-19 pandemic restricted the movement of people around the world, and as a result, the South African tourism industry was severely impacted. Tourism direct gross domestic product (TDGDP), which is a measure of the contribution of tourism activity to overall economic activity, decreased from R208 316 million in 2019 to R123 616 million in 2020 (40,7% decrease), according to Statistics SA.

The tourism sector directly employed 459 533 persons in 2020, a decrease of 41,1% or 320 563 employees compared with 2019. The tourism sector’s share of total employment decreased from 4,8% in 2019 to 3,1% in 2020. However, the sector has started to show some recovery after a drastic drop in tourist arrivals in 2020 and 2021.

The Tourism 2022 report released by Statistics SA shows that the volume of tourists dropped by 72,6% from 10 228 593 in 2019 to 2 802 320 in 2020 and declined by 19,5% between 2020 and 2021. The volume of tourist arrivals increased by 152,6% from 2 255 699 tourists in 2021 to 5 698 062 tourists in 2022. A gradual improvement was observed in the number of tourists arrivals from January to December 2022; however, it is still 44,3% below the pre-pandemic year of 2019.

Julia Simpson, World Travel and Tourism Council President and CEO, said that South Africa’s Travel and Tourism sector was impacted after the detection and surge of the Omicron variant. Many countries around the world placed severe and damaging restrictions on African countries, which caused even further damage to those economies and put thousands more livelihoods at risk.

“Although the future looks bright for the South African Travel and Tourism sector, the recovery this year will be slower than expected,” said Ms Simpson, “Knee-jerk travel restrictions imposed over South Africa and other African destinations were impulsive and unjustified. Instead of punishing, these countries should have been praised for discovering the variant early. However, with GDP contribution and jobs on the rise, the long-term forecast looks very positive.”

During the pandemic, the tourism industry suffered a staggering 55.6% loss and saw a 29.9% decrease in jobs. However, the industry started to bounce back in 2021, according to the World Travel and Tourism Council’s report. Its contribution to GDP climbed 8.4% year on year, to reach just over R195 billion.

The sector also saw a recovery of 20 000 Travel and Tourism jobs.

Source: Department of Tourism | Mail and Guardian | Stats SA | World Travel and Tourism Council