The local tourism and hospitality industry has long been one of the cornerstones of the South African economy, as millions of international tourists stream into the country each year to explore the countries natural wonders and majestic scenery while simultaneously providing vital employment opportunities to millions of locals.
In recent years, the sector has faced unprecedented challenges, most notably the global COVID-19 pandemic that brought travel to a standstill. Thankfully, the industry is now experiencing a timely boost and recovery which Akani Properties is witnessing through its tourism assets.
The recovery is caused by the past year’s uptick in local and international tourism, with the latest international arrivals data from Statistics South Africa showing that the local tourism sector experienced year-on-year growth rate of 5.1%, amounting to 8.92 million tourists exploring the country in 2024.
In January this year, SA welcomed just over 1.3-million foreign arrivals, a 4.6% increase from the same month a year earlier with the increase driven mainly by arrivals from the United Kingdom, Germany, the United Sates as well as neighbouring Southern African Development Community (SADC) countries, emphasising the region’s importance to the South African tourism industry.
This uptake represents a timely shot in the arm that the industry requires since the tourism sector contributes to the economic growth of South Africa (9.5% of the SA GDP in 2019) and creates jobs (forecasted 1.7 million job opportunities over the course of 2024).
This is because the hospitality industry is labour-intensive, employing a broad spectrum of workers from housekeeping staff and chefs, through to tour guides and managerial roles. As tourism numbers rise, so does the demand for these positions.
Furthermore, the industry stimulates the development of local infrastructure and amenities, which also benefits residents, and generates substantial revenue for local businesses. Renovations and upgrades to tourist hotspots including national parks, beaches, and historical sites, ensure that these locations remain attractive for regional and international tourists and more accessible for local adventure seekers as well. These improvements also often come with enhanced conservation efforts, preserving natural and cultural heritage.
Employment opportunities created by the uptick in tourism extend beyond the immediate confines of the hospitality industry, since construction workers, craftsmen, artists, and transport operators also benefit from the revived demand for services and products catering for tourists. This ripple effect stimulates diverse sectors of the economy, creating a more comprehensive and inclusive economic uplift.
Tourists spend money on accommodation, dining, entertainment, as well as transportation, among other services and this influx of foreign currency (R95 billion in terms of the total of tourist foreign direct spend in 2024 alone) strengthens the national economy.
Akani Properties see this influx of tourists convert into revenue for their retirement fund clients’ real estate and hospitality assets such as the Radisson Hotel in Kempton Park and others.
Tourism accommodation in South Africa was transformed by investment for the 2010 FIFA World Cup and has since been sustained by investment in the maintenance cycle that takes place every three to five years and now includes Post Covid refurbishments.
This his has allowed South Africa to maintain competitive pricing where a 4-star Hotel can cost between $80 to $100 (R1400 to R 1800) per night according to websites such as booking.com and Trip Advisor.
Tourism asset owners are now investing in digitisation due to the proliferation of online booking systems and the advent of E-Visas and the growing need for digital marketing strategies which are essential for companies and operators to reach an increasingly digital pool of potential customers.
Lastly, this recovery presents an opportunity for hospitality assets operators to champion sustainable and responsible tourism practices. This, requires investment in eco-friendly, responsibly sourced material and infrastructure, combined with the support of local communities, especially rural communities.
This allows companies to convert their social capital to revenue from eco-conscious travellers and ensures longevity of tourism assets and customer immersion experience.
The recovery in both domestic and international tourism could not have been better timed for the South African economy as it faces benign inflation and hopefully lowering interest rates locally while negotiating trade and geopolitical uncertainty globally.
Zamani Letjane is Chairman of Akani Properties, a R 5 billion black owned property portfolio management company