SOUTH AFRICAN TOURISM INDUSTRY ON A POSITIVE AND RAPID

UNCLAS SECTION 01 OF 03 PRETORIA 003678 SIPDIS DEPT FOR OES/PCI, OES/ENV, AND AF/S DEPT PASS EPA/OIA, SIPDIS REF: Pretoria 3431 E.O. 12958: N/A TAGS: ETRD EINV EAIR SENV SOCI CASC CPAS SF SUBJECT: SOUTH AFRICAN TOURISM INDUSTRY ON A POSITIVE AND RAPID GROWTH PATH ¶1. (U). Summary: The South African tourism industry has shown significant growth since the country was democratized in 1994. Over 8.4 million people visited South Africa in 2006. Tourism contributes more to the economy than the gold sector and that it employs over half a million people. South Africa is expected to host over 400,000 people during the FIFA World Cup soccer tournament in 2010. Various government departments and organizations, including the Department of Environmental Affairs and Tourism, the Department of Transport, South African Police Service (SAPs),and South African Airways are preparing for the World Cup. Crime and skills shortages represent serious challenges for the industry. End Summary. -------------- Tourism Booming -------------- ¶2. (U) Hobbled by sanctions and domestic turmoil during the 1980s, tourism in South Africa rebounded after 1994 and is today one of the fastest growing sectors of the economy, contributing more than 8 percent of GDP. (Note Post arrived at USD values by using the average annual rand/dollar exchange rate of 7.56 (2003),6.45 (2004),6.36 (2005) 6.77 (2006). Tourism contributed 8.3 percent of the GDP in 2006, making tourism significantly larger than the gold sector (which contributed 1.5 percent). End Note. Tourist Arrivals Tourist Spending Percent GDP 2003 6,504,890 $7.13 bn 8.1 2004 6,677,839 $7.41 bn 7.4 2005 7,368,742 $8.79 bn 8.15 2006 8,395,833 $9.75 bn 8.3 ¶3. (U) Most tourists come from Africa and the Middle East, followed by Europe. Tourists from North America are relatively few. The table below illustrates the tourists' arrival numbers by region of origin in 2005 and 2006: Arrivals by Region 2005 2006 Percent Of Origin Increase Africa and ME 5,356,576 6,267,576 17.0 Central Americas 47,818 54.421 13.7 North America 274,281 303,675 10.7 Australasia 95,818 108,425 13.2 Europe 1,308,634 1,381,881 5.6 -------------- Government Priority -------------- ¶4. (U) Tourism Business Council of South Africa (TBCSA) CEO Matsatsi Marobe recently told EST Assistant that the industry employs over 500,000 people and is well aligned with the economic priorities of the South Africa Government's Accelerated and Shared Growth Initiative for South Africa (ASGISA),an initiative established to increase GDP growth to six percent by 2010. The industry is job intensive, women and small business friendly, geographically disbursed, and an excellent launching pad for BEE and small-scale entrepreneurship. ¶5. (U) The South African cabinet approved an International Tourism Growth Strategy (ITGS) and a Domestic Tourism Growth Strategy (DTGS) in 2003 and 2004. ITGS was established to increase the number of foreign tourists, encourage longer stays, encourage and facilitate transformation (empowerment of the previously disadvantaged people) in the industry. ITGS funded tourism market studies which identified Africa, North America, Europe and Asia as priority markets. The government is now aggressively marketing South Africa in these regions. -------------- What Attracts Tourists to South Africa? -------------- ¶6. (U) Tourists come to South African for various reasons. Many Europeans come for safaris or business conferences. Africans can be lured by shopping or medical care. South Africa has eight world heritage sites, and ecotourism is one of the fastest growing tourist attraction areas. All tourists can enjoy an "African" experience in a country where they can drink the water. PRETORIA 00003678 002 OF 003 -------------- Room for Improvement With Business Tourism -------------- ¶7. (U) Eighteen percent of business tourists tour the country before attending business meetings or international conferences while twenty-two percent tour after these meetings. Even so, South Africa Tourism (SAT) statistics show that only five percent of the 8.4 million people who visited South Africa in 2006 came on business-related travel. SAT figures show that business tourists spend on average USD 203.00 a day compared to the USD 70.20 spent by leisure tourists. The Union of International Associations ranked South Africa twenty-third as a conference hosting country in 2005, and the International Congress and Convention Association ranked South Africa thirty-first in 2006. Cape Town, Durban and Johannesburg are the three most important convention sites. -------------- -------------- Preparing for the 2010 World Cup Soccer Tournament -------------- -------------- ¶8. (U) SAT CEO Moeketsi Mosola stated at a tourism conference in Durban in May that over 400,000 people are expected to come to South Africa for the 2010 FIFA World Cup. A FIFA (world soccer governing body) contractor Jaime Byron mentioned recently that they have already secured 27,000 of the required 55,000 accredited rooms. The Airports Company of South Africa (ACSA) CEO Monhla Hlahla reported that preparations for effective air transport are well underway. ACSA is progressing with infrastructural developments in major airports to deal with the expected crowds during the World Cup. Hlahla advised that the Department of Transport drafted an airlift strategy in 2006, leading to the opening of new routes, and the introduction of new services and operators. Hlahla said Air France and British Airways have increased their flights to and from Johannesburg, while China Eastern Airlines has now launched flights to and from South Africa. Delta announced in September that it planned to inaugurate a new route between New York and Cape Town in March 2008 (REFTEL). South African Police Services SAPs) Divisional Commissioner Arno Lamoer stated that the South African government has budgeted USD 1.57 million for safety and security during the World Cup and that SAPS plans to deploy 193,000 police officers by ¶2010. -------------- Challenges Faced by the Tourism Industry -------------- ¶9. (U) DEAT Minister Van Schalkwyk stated in a recent tourism meeting that crime remains a serious threat to tourism and could have a devastating impact if not addressed. Tourists have reported baggage theft at airports, hotel theft, credit card fraud and ATM muggings. The rate of contact crime incidents such as car high-jacking, assault, rape and murder is high in South Africa. 10 (U) There is a concern among travelers about the South African Government's policy of requiring two blank pages in travelers' passports. A query to South African Airways (SAA) confirmed that at least 12 travelers per month are refused entry at O.R.Tambo International airport (Johannesburg) because of failure to comply with this requirement. EST Assistant made enquiries with a Department of Home Affairs (DHA) official and was told that the Immigration Regulations Act of 2002, 2(e) stipulates that a traveler's passport must have at least one unused page for the purpose of endorsing a visa or permit, and in the event of extending a traveler's stay. The DHA official also said that to the best of her knowledge South African missions overseas and airline carriers are adequately informed about this regulation. The official also noted that airlines should screen passengers' passports and refuse boarding for those who do not comply with the rule. -------------- Comment -------------- ¶11. (U) The South African tourism industry is a significant contributor to the country's economic growth and employment, and has demonstrated the success of the government's tourism investment and marketing strategy. South Africans are very enthusiastic about hosting the World Cup in 2010, but South Africa may have to solicit external support for infrastructure development from countries such as the U.S., Germany and Britain because of the shortage of skilled labor. It remains to be seen weather the South African government and the tourism industry will be able to overcome existing challenges, such as distance, airline capacity, a relatively strong PRETORIA 00003678 003 OF 003 exchange rate and an unacceptably high level of crime, and continue to increase tourism's contribution to the South African economy. End Comment TEITELBAUM