Tourism recovery gains traction

Global tourism has recovered well from the negative impact of Covid lockdowns and South Africa is no exception, with a recovery rate standing at 80% of pre-Covid arrivals from overseas.

During the first six months of 2023, tourist arrivals in South Africa were 73% higher than the same period last year and 79% higher than the same period in 2019 (pre-Covid). This rate of recovery is on par with the global average of around 80%, but slightly lower than the recovery rate of 88% for Africa as a whole. The latter rate has been boosted by a recovery of more than 100% for North African countries.

According to the UN World Tourism Organisation (UNWTO), twice as many people travelled during the first quarter of 2023 than in the same period in 2022, with the Middle East as the only region that has recovered to above pre-pandemic levels.

The UNWTO remains confident that global tourism is on its way to a complete recovery, especially now that China has abandoned its harsh lockdown regulations. The lengthy restrictions on travel in the world’s second largest economy had stifled the recovery process in the whole of South East Asia, but the region’s tourism sector is now playing catch-up with the rest of the world.

At a recovery rate of 69%, international tourism receipts have not been able to match the recovery rate for travel, a phenomenon that is related to subdued economic growth in many countries. Consumers all over the world are under pressure as a result of high energy prices, higher inflation in general and higher interest rates.

USA rockets into first place

An interesting feature of the June data on inbound overseas tourists to South Africa is the sharp rise in importance of the USA, which now boasts the largest number of arrivals by a very long shot. After gaining ground on the UK, which has historically been the largest source of foreign visitors and having consolidated its number two ranking (above Germany) during 2022, the USA has now flown past these two countries with twice as many arrivals as the UK and six times more than Germany.

A further new trend of the June data is the return of the Chinese, with a four-fold increase compared to June last year. Five countries (that provide more than 1,000 visitors) managed to more than double the number of tourists visiting South Africa between June 2022 and June 2023, namely China, Saudi Arabia, New Zealand, Russia and Japan.

It is not far-fetched to assume that international interest in (and concern over) South Africa’s stance on presumed “neutrality” towards the Russian military invasion of Ukraine has led to higher visitor numbers from both Nato and Brics member countries – hence the extraordinary increases in “tourist” arrivals from several of these countries.

The strong recovery of inbound tourist arrivals from overseas has predictably also led to an impressive recovery of accommodation income for the hospitality industry. During the three months between March and May 2023, hotels increased this source of income by 34% (year-on-year). The group for guest houses, B&B and self-catering establishments was close to par, with a year-on-year recovery rate of 32%.

During and immediately after Covid, the share of hotels in total tourist accommodation income declined quite sharply from around two-thirds to only one-third, but has now clawed back lost ground to a level of 50%.

Activity in the tourism industry’s supply-chain involves labour intensive sectors and inbound tourists are also a rich source of foreign exchange. Long may the sector’s recovery last!