M van Schalkwyk: Africa Business Tourism Conference

27 February 2007

Exponential growth of South Africa's tourism industry

It gives me great pleasure to address you at the opening of the Business
Tourism Conference. South Africa's economy has been in an upward phase of the
business cycle since September 1999. This has been the longest period of
economic expansion in our country's recorded history. Our tourism industry,
having overtaken gold as a source of foreign exchange, is one of the major
contributors to this growth.

Government made a commitment to the tourism industry six years ago and
together we have stayed the course with excellent results. Since 1999, we have
increased the budget allocation for tourism 400% and the effect on the
industry's growth has been phenomenal.

Our first focal point was to put South Africa on the map by achieving global
competitiveness in leisure tourism. This was based on the fact that globally,
leisure constitutes the largest slice of the tourism pie. The second critical
decision taken jointly by government in partnership with businesses was to
focus on domestic tourism because any tourism destination that takes itself
seriously needs to have a strong domestic tourism market. The result of this
was the Sho't Left Campaign, which has been operating successfully for the past
three years.

The South African meetings industry federation and government, represented
by South African Tourism, agreed on a global launch for business tourism in
2005. This marked the start of a concerted joint effort to focus on growing
business tourism in the country. Over the past three years government has
dedicated an average of R17 million per year to business tourism and we will
continue to invest in this segment in future.

I am also happy to announce that the South African Tourism Board has now
approved the comprehensive new Business Tourism Growth Strategy. The strategy
is the result of extensive consultation between the business tourism industry
and government which was designed to ensure that we align our efforts in
respect of the growth of this industry. Now that we have the strategy in place,
the importance of the ongoing partnership between government and industry
during the implementation phase cannot be understated.

I call again on all partners to redouble our efforts in growing business
tourism as we did with leisure. Our combined efforts will enable tourism in
South Africa to take another quantum leap forward. I would like to assure
industry that you have a committed partner in government. You have invested
substantially in the development of the sector through the R55 million that we
receive annually through the Tourism Levy. You have further demonstrated your
commitment by serving on the boards of our statutory bodies. We have worked
together successfully and there is no time for complacency.

Latest tourism statistics

What we have achieved together is reflected in the exponential growth of
South Africa's tourism industry since our transition to democracy in 1994. It
gives me great pleasure to announce that the latest tourism statistics,
covering the period January to September 2006, show that we have beaten our
best performance yet again. We had a 14,5% increase in tourism arrivals over
the comparable figure for 2005. This means that South Africa had 765 675 more
visitors in the first nine months of 2006 than in the first nine months of
2005.

Over six million people (6 055 726) visited South Africa between January and
September last year, suggesting that we are well on track to surpass the annual
record that we set in 2006. Once more, the largest source of growth was Africa,
with an increase of 18,3% in arrivals from the African continent. However, we
also saw strong growth in arrivals from North America with an increase of 9,7%,
representing almost 20 000 more visitors.

Although it was off a low base we saw a massive 42,4% increase in visitors
from the Russian Federation, 24,1% more visitors from Hungary and 17,4% more
visitors from Finland. This shows that we have been successful at achieving
broader market penetration on the European continent, beyond our traditional
source markets in Western Europe. The growth rate for arrivals from the
continent as a whole was 4,6% which was just ahead of the global average growth
rate of 4,5% for the year.

We are pleased with having achieved a 4,5% increase in arrivals from Asia in
particular with 17,5% more visitors from India and excellent growth in arrivals
from Japan, Thailand and Singapore. However, a decrease in arrivals from China,
Malaysia and the Philippines, suggests that we need to improve our efforts to
attract visitors from these key markets.

Growth in South African and indeed sub-Saharan African tourism is driving
overwhelmingly positive tourism performance on the continent. Over the past two
years Africa has achieved the fastest growth rates of any major region in the
world. According to the United Nations World Tourism Organisation (UNWTO),
"Africa has outpaced all other regions with almost twice the rate of global
growth reaching 8,1% in 2006, following an already strong 2005. This star
performance was led by sub-Saharan Africa (+9,4%), while North Africa (+5,8%)
also ended the year above average. Major destinations such as South Africa,
Kenya and Morocco all continued to post excellent results."

Business tourism

Business tourism is an increasingly important segment of our growing
industry. Business travel is a lucrative sector of the market which ramps up
tourism's contribution to the economy in general. On average, business
travellers spend three times more than leisure travellers and up to 40% of
business travellers' return to a destination within five years. There is also
significant crossover into the leisure travel market. A number of 18% of
business travellers go on tours prior to their business activities while 22% do
the same afterwards.

Business tourists currently make up five percent of South Africa's total
tourism market. I am certain that this figure will be improved upon in the lead
up to 2010 and believe that the industry's vision of doubling this figure in
the next three years is not overly ambitious. The further development and roll
out of the Business Unusual campaign will play an important part in the
expansion of the sector.

Business tourism contributed R2,3 billion to overall tourism revenue in
2005, representing just over four percent of the total. Yet business tourists
have a much higher average daily spend than leisure tourists. This suggests
that there is room to attract more business tourists and to extract more value
from them and that the rewards for doing so will be substantial. If the
business tourism sector succeeds in increasing the proportion of business
tourists and if they win the additional challenges of getting them to stay
longer and spend more, we will ultimately increase the number of jobs created
per tourist. This will be crucial if our sector is to meet the expectations
created by its priority position within the Accelerated and Shared Growth
Initiative for South Africa (AsgiSA).

Conclusion

Last week in his delivery of the annual budget speech, the Minister of
Finance reminded South African businesses to be mindful of the lucrative niches
in the global economy. The business tourism market is one such niche. I am
encouraged by the presence and participation of well respected international
experts and hosted international buyers at this conference. I hope that your
interaction with our local industry will be long-lasting and mutually
profitable.

Our department has taken heed of the President's call for better
co-ordination between government departments to improve service delivery and
avoid duplication and wastage of effort. As a result we are working closely
with the Department of Transport, represented here by Minister Jeff Radebe, to
ensure that our transport infrastructure takes into account the requirements of
our visitors as well as our people. We are also working closely with the
Department of Trade and Industry (DTI) to ensure that our support packages are
compatible so that we can practically assist the industry to reach even greater
heights. And that in return, the industry can assist us in delivering on our
promise to create jobs, reduce poverty and build a South Africa that is equally
enjoyed by all who live in it.

Enquiries:
Riaan Aucamp
Cell: 083 778 9923

Issued by: Ministry of Environmental Affairs and Tourism
27 February 2007