Programme director
Stakeholders in the tourism sector
Members of the media
Government officials
Private sector delegates
Honoured guests
Ladies and gentlemen
All protocol observed.
Programme director, allow me first of all to express my sincere gratitude to you and your organisation, for the honour that you have bestowed on me by inviting me to attend this premier gathering. We are particularly pleased as the province of KwaZulu-Natal (KZN) to be entrusted with hosting the Hospitality Investment Conference Africa. Since our province is the indisputable “gateway to Africa”, we believe it is befitting that a conference of this nature and magnitude is held here.
My brief remarks this evening will focus on some of the key issues that underpin the Hospitality sector, as well as the symbiotic synergies between the hospitality sector and the rest of the economy. Programme director, we are cognisant of the fact that the primary purpose of this conference is on hospitality investment. However, since the hospitality sector is an important sub-sector of the broader tourism sector, our remarks will also focus on the tourism sector in general.
Programme director, the hospitality sector is generally difficult to measure. By definition, the hospitality sector includes all businesses that provide food, beverages, and/or accommodation services. This includes: restaurants; pubs, bars and clubs; hotels; contract catering; hospitality services. The tourism sector, on the other hand, is a summation of the hospitality sector and pleasure travel. Tourism is thus a marketing industry that promotes both hospitality and travel.
Ladies and gentlemen, we are gathered here when the South African government has recently launched its New Growth Path (NGP), which is aimed at accelerating employment creation, shared economic growth and equity. The rallying call has been made to all sectors of our society to roll up their sleeves and work together to achieve the goals of the New Growth Path. It is not a coincidence that the NGP identifies tourism as one of the strategic sectors to leverage massive jobs and growth.
This confirms the strategic role of the tourism sector in our economies. Programme director, this conference comes at a time when the eyes of the global world are still fixated to our shores after we hosted a resoundingly successful 2010 world cup soccer tournament on behalf of the African continent. The hosting of 2010 World Cup was not only prestigious but presented the country with huge economic and tourism investment opportunities. It is therefore important that we do not let these opportunities slip through our grasp.
International developments
Ladies and gentlemen, in the aftermath of debilitating recession of 2009, international tourism demand is steadily regaining momentum. Recovery in the global tourism industry is faster than initially expected. In 2010, Africa still accounted for only 3.4% of global tourism receipts and 5.2% of tourist arrivals.
However, developing countries now represent half of global growth, and six of the 10 most rapidly expanding economies are located in sub-Saharan Africa. Figures published by United Nations World Tourism Organisation (UNWTO) show that international arrivals are projected to rise by 4 to 5% in 2011 to around 950 million. We are confident that sub- Saharan Africa will enjoy a fair share of this global growth.
Tourism is the world's largest sector, with annual revenues of almost $500 billion. Globally, tourism accounts for roughly 35% of exports of services and over 8% of exports of goods. Approximately 340 million people are directly and indirectly employed in tourism around the world. In 1950, international foreign tourist arrivals, a key indicator of tourism growth, were an estimated 25 million. By 2004, they had reached 760 million and are predicted to grow to 1.56 billion in 2020.
The strong growth of the tourism sector over the past 50 years is in part a result of economic globalisation, including innovations in transport and information and communication technologies, which have made travel cheaper and more accessible. Other factors leading to tourism's exponential growth include increasing leisure time and disposable income in the leading tourist-generating markets of Northern America, Western Europe and Japan.
Regional developments
Programme director, tourism is a major economic opportunity for many countries, particularly those in the developing world. Tourism is labour intensive and presents comparatively low barriers to entry for entrepreneurs with regards to skills. It also has a relatively low ratio of investment to job creation and can create many jobs in a comparatively short time. Tourism generates employment and income in supporting industries, such as financial services, construction, cleaning, security, laundry, arts and crafts, beach vendors, food and beverages.
The Tourism sector stimulates enormous investment in infrastructure and provides substantial tax revenues while generating significant export earnings. Tourism also offers the opportunity of bringing development to rural areas, and can allow for the sustainable utilisation of the natural environment. Tourism can build cross-cultural relations; form a force for nation-building and national identity and branding.
According to the research done by the Department of Trade and Industry, it is estimated that there will be 77.3 million international arrivals to Africa in 2020. This represents an annual growth rate of 5.5% over the period 1995 to 2020. Africa's overall share will increase to 5% of total by 2020. In Africa, long haul travel is expected to grow more slowly than intraregional travel. In other words, there will be stronger growth in arrivals between African countries than from visits to Africa emanating from outside of the continent. For this reason regional tourism is critical.
In servicing a growing domestic tourism market, a product gap has been identified. Many of the tourism establishments in existence are positioned and priced for foreign tourists, and not appropriate to the needs of domestic market segments. This is one of the areas where the product development and investment strategy must focus.
South Africa and KwaZulu-Natal
Allow me ladies and gentlemen to give a brief profile of some of the salient statistics that characterise the tourism sector in our province and the generality of our country.
While data on actual investment towards the hospitality sector in KwaZulu-Natal and South Africa at large is scarcely available, the hospitality sector benefitted tremendously from the 2010 World Cup. For instance, the number of hotel establishments increased by 55% from 29 in 2004 to 45 in 2010 and the number of hotel rooms also increased by 21% from 4,051 to 4,898.
In Durban North and Umhlanga, the number of establishments increased by 125% from 8 in 2004 to 18 in 2010 and the number of rooms increased by 135% from 1,122 to 2,635 during the same period. The FIFA World Cup caused a spike in hotel occupancies in June 2010 to reach 64.4% in Durban compared to 625 in Cape Town and Johannesburg.
Programme director, these figures provide anecdotal evidence of the huge investment spending that was brought about by the world cup in the hospitality sector in Durban.
The South African tourism industry is generally estimated to be worth about R20 billion according to the National Department of Trade and Industry. KwaZulu- Natal has a comparative advantage in tourism as compared to a number of other provinces in South Africa. On that basis, the tourism sector is one of the priority sectors identified by the KwaZulu-Natal as an engine to accelerate economic growth.
The province derives immense benefits from tourism ranging from employment, foreign currency receipts and a source of livelihood to a number of our families. Tourism remains an important economic sector in KwaZulu-Natal contributing about 10% (direct and indirect) to the province’s GDP. The hotel and accommodation sector contributes about 1.0% to the South Africa GDP and about 1.1% to the provincial Gross Domestic Products.
In 2006, tourism receipts accounted for R8.8 billion in the province against R66.6 billion for the country as a whole. The average value of domestic tourism per annum is estimated at R5.3 billion. In 2007, total employment in the sector was estimated at 143 000 (direct and indirect). KwaZulu-Natal’s major foreign tourism source markets include Swaziland (23%), Lesotho (17%), Botswana (8%), Zimbabwe (9%), United Kingdom (7%), Mozambique (4%), Germany (5%), France (3%), USA (4%), France (3%) and Netherlands (3%).
Ladies and gentlemen, give me your indulgence whilst I blow our horn about the KZN tourism sector and the beauty of our province. KZN is endowed with magnificent natural resources that position the province as a popular destination for both domestic and international tourism. KZN is generally regarded as the garden province of South Africa due to its coastal subtropical region with abundant well-watered valleys, undulating terrains, warm Indian Ocean, splendid beaches and the dramatic Drakensberg mountain range, with several peaks well over 3 000 meters.
The province boasts of some of the greatest accommodation and conference facilities, wonderful leisure and recreation facilities in the world. These include but not limited to iconic International Cricket Council (ICC); uShaka Marine World; King Shaka International Airport and Dube Trade Port; State of the art Moses Mabhida Stadium; Africa’s busiest sea port (Durban) and biggest bulk sea port (Richards Bay); and excellent road and rail infrastructure and global logistics service providers making it southern Africa’s Trade Gateway.
The province is further embellished with a wide range of other natural resources which include iSimangaliso Wetlands Park and uKhahlamba Drakensberg Park. The province is also endowed with a number of historical and cultural assets which make KZN unique compared to other provinces in South Africa. These include:
- Home to multicultural people - Zulus and White South Africans of English and Afrikaans heritage live in the province together with the country’s largest group of South Africans of Indian descent.
- Zulu culture- A major marketing thrust from the tourism authority is to link the branding of the province with Zulu culture, and more particularly with the notion of the Zulu kingdom. Important sites include the eMakhosini Heritage Park, Ulundi and Nongoma, where the current Zulu king resides.
- Arts and crafts- traditional Zulu crafts and cultural items are popular with visitors. Local municipalities are responding by building markets, hoping to facilitate economic growth and employment opportunities.
- Battlefields- KwaZulu-Natal was the site of several of the most important battles in the wars that created the country now known as South Africa.
- Indian culture- Indian temples in Durban and on the North Coast provide superb architecture to admire.
New Growth Path for the Hospitality Industry
Ladies and gentlemen, we cannot turn a blind eye to the fact that tourism sector require to be transformed to better reflect and represent our democratic society. The poor communities have to participate meaningfully in tourism initiatives through joint ventures and share equity schemes. We can no longer placate them through the promises of unskilled jobs as security guards, tour guides and cleaners in tourism establishments. If we do not genuinely transform the tourism sector, we will never achieve our goal of shared economic growth. Therefore a new growth path for the industry is required.
In this new growth path we need to emphasise working together in marketing each other as African countries. Negative competition is detrimental to all of us. Let us identify our comparative advantages and create our unique products to market. Most importantly we need to develop tourism products that cater for the needs of the growing domestic market segment.
Programme director, service delivery excellence is paramount to the achievement of our developmental goals and poor quality service standards in the hospitality industry cannot be acceptable and tolerated. The attainment of service delivery excellence should be a concerted effort by all stakeholders. As we strive to grow tourism in our countries, service standards will need to be developed, maintained, measured and continuously improved.
Tourism also offers the opportunity of bringing development to rural areas, and can allow for the sustainable utilisation of the natural environment. Tourism can build cross-cultural relations, form a force for nation-building and national identity and branding. The sector can also stimulate enormous investment in infrastructure and provides substantial tax revenues while generating significant export earnings.
Ladies and gentlemen, we recognise that tourism cannot co-exist with conflict. It is rather a catalyst for peace and harmony because it involves interaction between people from all walks of life, with different political, religious, economic and social backgrounds. It allows sharing of cultural and traditional values, therefore creating a sense of respect for each other. It is therefore imperative that we create peace and stability in our countries and atmosphere that is conducive for investment.
Ladies and gentlemen, the adverse impact of crime on tourism and to the overall stability of our country can not be overstressed. Negative perceptions about lack of adequate safety and security can have devastating effects on regional tourism industries. As government, we reaffirm our commitment to the fight against crime in our quest to make KwaZulu-Natal a safe tourist destination.
Africa has a comparative advantage in a sense that it has warm and friendly people. Let us maximise this comparative advantage by skilling our frontline workers in restaurants, garages, hotels on etiquette of making visitors experience a lasting and memorable one.
Programme director, allow me, once again to express my extreme gratitude to you for taking the initiative to organise and host this gathering, the subject of its discussions we consider as pertinent to the eventual development of our province and eradication of poverty and unemployment.
Lastly, ladies and gentlemen, may I take this opportunity to wish you a progressive symposium which by its end, we hope to have moved a milestone towards the ultimate new growth path of the tourism sector in KwaZulu-Natal, South Africa and the entire Sub-Saharan Africa.
I thank you.
Source: KwaZulu-Natal Economic Development and Tourism
