Mr Alan Winde, Western Cape MEC for Finance, Economic Development and Tourism
Representatives from provincial government and city officials
Mayors and councillors
Representatives of our regional and local tourism organisations
Business leaders and stakeholders
Programme Director
Thank you for inviting me to address you at this annual industry platform. I appreciate the opportunity to share with you some reflections on global trends impacting on our destination. Given the complexity of the changes we face, it is crucial that we engage in platforms such as these to brainstorm on new opportunities to unlock value.
The partnership between the private and public sectors is a critical one. Together, we must continually ask what more we can do to compete with the best in the world. When it comes to tourism growth and development, I am therefore always very encouraged by the ‘yes we can’ attitude prevalent in the industry and different spheres of government.
Our destination is currently well positioned and our collaborative efforts before and during the FIFA World Cup have paid off. International tourism arrivals for 2010 registered a year-on-year growth of 15.1 percent, with more than 8 million foreign tourist arrivals to our country.
It is important that we now work harder than ever to capitalise on the ‘top of mind’ awareness that the soccer tournament has generated for the country. And, of course, to convert awareness into sales and revenue and ultimately decent work and other social benefits to the communities within which we operate.
From the side of government we have taken bold steps to position tourism as one of the six cornerstones of economic growth and job creation. The launch last week of the first ever National Tourism Sector Strategy (NTSS) espouses this long term vision.
We are determined to increase the number of foreign tourist arrivals to 15 million by 2020. But this is not an end in itself. What is important is to translate those arrivals into broader economic benefits to our people.
The aim is to increase tourism’s contribution to the gross domestic product (GDP) from some R190 billion in 2009 to R499 billion by 2020. This cannot be jobless growth, and we are committed to creating 225 000 new job opportunities by 2020.
We look forward to working with our partners in the other tiers of government as well as the private sector in implementing this 2020 vision. As a collective we can demonstrate that two plus two does indeed equal five.
It is vital, from my perspective, to give much greater priority to building the domestic tourism sector as a mainstay of sustainability. We can do much more to encourage our fellow South Africans to enjoy the magnificent variety and authenticity that our destination has to offer.
Because of our dependence on international tourism, I would like to specifically refer to three areas, namely global economic trends and the rise of emerging markets, the interconnectedness of aviation and tourism and the opportunities presented by green growth.
The global growth picture
Despite experiencing various setbacks and a fair amount of turbulence over the last two years, the global travel and tourism industry is still one of the world’s fastest growing economic sectors.
Travel and tourism now account for 9.2 percent of global gross domestic product (GDP), 4.8 percent of world exports and 9.2 percent of world investment. Forecasts indicate that travel and tourism’s total economic contribution in 2011 will account for more than 9.1 percent or R40 trillion (US$ 5987 billion) of global GDP and 258 million jobs worldwide.
International tourist arrivals also tell the story of the exceptional growth, having increased from about 528 million in 1995 to 935 million by 2010, meaning it has almost doubled in just 15 years. It is expected to almost double again to reach nearly 1.6 billion by 2020.
It is easy to get lost in these numbers and think that the road ahead is paved with gold. But we must understand that the global market place will become ever more competitive and trading conditions will be disrupted from time to time.
On a global scale, we should not expect the recovery to speed up too quickly. Forecasts indicate overall growth in international arrivals of between 4 and 5 percent for 2011. The forecasted growth figure for Africa is between 4 and 7 percent for 2011, compared to 2 and 4 percent growth for Europe.
I point to these realities not to discourage, but rather to challenge us to find new and improved ways to compete in the global marketplace. We must be flexible as we move towards achieving our 2020 vision.
New emerging market opportunities
There are also new opportunities. In 1980, emerging economies contributed less than 30 percent of international tourist arrivals, compared to the more than 70 percent from advanced economies. By last year, this gap is forecasted to have shrunk to such an extent that about half of international arrivals are from advanced markets and the other half from emerging markets.
The developing world’s share of global GDP has increased from 33.7 percent in 1980 to 43.4 percent in 2010, and all indications are that the share of discretionary spending and consumption in these markets will grow dramatically in the next decade.
Looking at the global picture, it is impossible not to note a shift eastwards, and to our continent. The mature markets in Europe and the United States remain large in absolute terms, but their future growth will be significantly outstripped by that of the markets in Asia, Latin America and on our own continent.
That the growing middle-income countries will become important source markets of the future do not render our traditional markets insignificant and income per capita will still overshadow that in emerging markets. The priority is to protect our existing market share in traditional markets whilst recognising that the long-term growth opportunities lie in developing additional markets.
Aviation and green growth
Programme director, we must also remain vigilant about new cost drivers in aviation that could affect tourist behaviour and travel patterns. With the exponential growth in international tourist flows and global airlift, it is increasingly recognised that the aviation and tourism sectors cannot operate in silos.
Newly forged global airline alliances and their associated hub-and-spoke airlift configurations are making various long-haul destinations more accessible than before.
Tourism leaders worldwide are also increasingly engaging on potential threats to the airlift component of the tourism value chain, and are closely tracking global exchange rate and currency volatility, oil prices, fuel hedging costs and the costs associated with increased transport security.
Whilst we recognise the right of governments to raise taxes to fund tourism and aviation growth, and we do so ourselves, we also maintain that such taxes should be fair, reasonable and transparent. We therefore just cannot accept the order of magnitude, or the discriminatory nature of the arbitrary taxes on international tourism to long haul destinations such as South Africa that is imposed by some European countries.
We are therefore working closely with various other long haul destinations to convince the governments imposing these taxes that they only serve to undermine tourism development and job creation in our respective destinations.
Furthermore, travel and tourism have begun to establish its place on the green growth agenda. Industry is already repositioning as governments across the world start to put in place a tighter regulatory framework, and introduce economic instruments that price carbon.
The shift to low-carbon cities presents many indirect opportunities in providing the required innovation, technology deployment and new market offerings on the adaptation and mitigation sides. In terms of investment in green tourism product offerings and nature-based tourism, there are also many opportunities in biodiversity-based businesses and the maintenance of ecological infrastructure.
As far as South Africa is concerned, I believe we should move beyond merely talking about greening into taking definitive action, and we should do so quickly. If we as an industry move fast enough in this regard, we are well positioned to not only take the lead in such developments, but also use it as a competitive advantage.
Conclusion
Programme Director, as the world changes around us, it is imperative that we as a travel and tourism industry in South Africa stay one step ahead. This will mean challenging ourselves in terms of how we understand our environment, our responsibilities, our markets and our consumers.
It means innovative and strategic thinking in terms of how we plan for the future, as well as the flexibility to adapt to rapidly evolving circumstances.
Thank you for inviting me to address this conference today. I know that these kinds of interactions can only serve to equip us better in terms of our shared objective of growing our industry and making a meaningful, sustainable and lasting impact. I wish you all the best with your deliberations.
I thank you.
