Understanding the Tourism Puzzle!

Understanding the Tourism Puzzle! Tshwane Tourism Association Tourism Showcase Gillian Saunders Head of Advisory Services : Grant Thornton January 2018 2012 Grant Thornton South Africa. All rights reserved. 2017 2016 Grant Thornton. All rights reserved.

Global tourism Africa Tourism Competitiveness and Trends South Africa International tourism Domestic Tourism

Global Tourism Performance

Global International Tourism Growth 2016 3,9% arrivals growth 2015 2,6% receipts growth (blended local currency) 529 403 588 604 626 562 437 436 443 457 677 676 476 466 696 690 485 533 761 634 807 679 853 743 987 908 927 857 891 905 986 949 1236 1104 1146 1067 1035 995 1295 1133 1232 1184 1235 1220 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 International arrivals (millions) International Tourist Receipts (US$bn)

Global International Tourism Lower growth at 3,0% pa - 2020 3,3% 2020 2030 2,9%

Global International Tourism Almost 60% of arrivals are to emerging economies

Global International Tourism Growth at 5,3 % pa 2013 2020 6,1% 2020 2030 4,7% Africa reaches 134m arrivals

Global International Tourism Africa share grows from 3% to 7%

Global International Tourism

Global Outlook Global growth in international tourism arrivals continues More moderate pace, from 4,2% per year (1980-2020) to 3,3% (2020-2030): Substantial potential for further expansion in coming decades Established as well as new destinations can benefit provided adequate conditions and policies: business environment infrastructure facilitation marketing human resources challenges maximising social and economic benefits minimising negative impacts the long-term tourism growth pattern: more moderate, sustainable and inclusive

Global League Tables - Inbound International tourist arrivals (millions) Change (%) Rank Series 2015 2016* 15/14 16*/15 1 France TF 84.5 82.6 0.9-2.2 2 United States TF 77.5 75.6 3.3-2.4 3 Spain TF 68.5 75.6 5.5 10.3 4 China TF 56.9 59.3 2.3 4.2 5 Italy TF 50.7 52.4 4.4 3.2 6 United Kingdom TF 34.4 35.8 5.6 4.0 7 Germany TCE 35.0 35.6 6.0 1.7 8 Mexico TF 32.1 35.0 9.4 8.9 9 Thailand TF 29.9 32.6 20.6 8.9 10 Turkey TF 39.5-0.8

Global League Tables - Inbound International tourist receipts US$ Local currencies (millions) Change (%) Change (%) Rank 2015 2016* 15/14 16*/15 15/14 16*/15 1 United States 205.4 205.9 7.0 0.3 7.0 0.3 2 Spain 56.5 60.3-13.3 6.9 3.8 7.1 3 Thailand 44.9 49.9 16.9 11.0 23.0 14.7 4 China 45.0 44.4 2.1-1.2 3.6 5.3 5 France 44.9 42.5-22.9-5.3-7.6-5.1 6 Italy 39.4 40.2-13.3 2.0 3.8 2.3 7 United Kingdom 45.5 39.6-2.3-12.9 5.2-1.4 8 Germany 36.9 37.4-14.8 1.4 2.0 1.7 9 Hong Kong (China) 36.2 32.9-5.8-9.1-5.8-9.0 10 Australia 28.9 32.4-8.2 12.3 10.2 13.5

Africa Tourism Performance

Tourist Arrivals World vs Africa

Sierra Leone Guinea Guinea-Bissau Chad Niger Gambia Mali Burkina Faso Madagascar Benin Togo Seychelles Reunion Cabo Verde Angola Malawi Ethiopia Swaziland Ghana Zambia Rwanda Senegal Tanzania Kenya Mauritius Nigeria Uganda Namibia Cote d'ivoire Botswana Mozambique Zimbabwe South Africa International Arrivals to African Countries 2015 2014 2013-1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 10 00

Tourism Competitiveness

WEF Tourism Competitiveness Index 2017 Sub-Saharan Africa Rank Global Rank South Africa 1 53 Mauritius 2 55 Kenya 3 80 Namibia 4 82 Cape Verde 5 83 Botswana 6 85 Tanzania 7 91 Rwanda 8 97 Uganda 9 106 Zambia 10 108 Ivory Coast 11 109 Senegal 12 111 The Gambia 13 112 Zimbabwe 14 114 Ethiopia 15 116 Gabon 16 119 Ghana 17 120 Madagascar 18 121 Mozambique 19 122 Malawi 20 123 Cameroon 21 126 Benin 22 127 Lesotho 23 128 Nigeria 24 129 Mali 25 130 Sierra Leone 26 131 Mauritania 27 132 DRC 28 133 Burundi 29 134 Chad 30 135

WEF Tourism Competitiveness Ranking 2017 South Africa Enabling Environment Business Environment 21 5.4 Safety and Security 120 3.9 Health and Hygiene 113 3.8 HR & Labour Market 63 4.6 ICT Readiness 68 4.4 T&T Policy & Conditions Prioritization of Travel & Tourism 59 4.7 International Openness 110 2.4 Price Competitiveness 43 5.2 Environmental Sustainability 117 3.6 Infrastructure Air Transport 46 3.4 Ground & Port 59 3.4 Tourist Service Infrastructure 59 4.4 Natural and Cultural Resources Natural Resources 23 4.4 Cultural & Business Travel 19 3.4

Demographic shifts Ageing The number of elderly will explode Surprisingly, 90% of this growth will take place in emerging markets Non-retirement will increasingly be a major theme The wealthy Bay boomers Concentration of wealth High Net Wealth individuals Low income travelers staycations

The Consumer Psyche Cartography of the emerging consumer psyche - ConsumerShift Andy Hines Authenticity, Connection, Anti-Consumerism, Self-Expression, & Enoughness Modern, Post Modern, Integral "Mindful Consumption " idiosyncrasies and detail "Slow" Give back to communities and destinations "Carbon guilt" geo-local travel "mass localisation" - not if, but when! Hyper-local sourcing Reflect my values Spending my money and time Declining trust in brands (gen Y) The Question is will emerging market consumers adopt this Psyche?

The Fourth Industrial Revolution We stand on the brink of a technological revolution that will fundamentally alter the way we live, work and relate to one another. In its scale, scope and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear; the response to it must be integrated and comprehensive, involving all the stakeholders from of the global polity, from the public and private sectors to academia and civil society. Now the Fourth Industrial revolution is building on the third.. It is characterised by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres Klaus Schwab, Jan 2016, Executive Chairman, World Economic Forum

South African Tourism

International visitor & tourist arrivals for South Africa 16 000 000 14 000 000 12 000 000 6,9 % average annual growth 10 000 000 8 000 000 6 000 000 4 000 000 3,7% average annual growth 2 000 000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Visitors Tourists (incl) Tourists (Excl) Source: Statistics South Africa Note: Stats SA started publishing information on TOURISTS as defined by United Nations World Tourism Organisation ("UNWTO") with the January 2009 data. Prior to this the volume of TRAVELLERS and VISITOR'S were only reported on.

Foreign Tourism Overseas African Air African Land Total Total Tourists 2016 2531046 635950 6877167 10044 163 2015 2144988 600464 6145650 8891102 Growth 16/15 18.0% 5.9% 11.9% 13.0% % Tourists 2016 25.2% 6.3% 68.5% 100.0% Holiday Tourists - 2016 No. on Holiday 1169849 138637 453893 1762380 % of total on holiday 46.2% 21.8% 6.6% 17.5% % of total SA holiday tourists 66.4% 7.9% 25.8% 100.0% Business Tourists - 2016 No. business tourists 580666 184426 302595 1067687 % total travelling as business tourists 22.9% 29.0% 4.4% 10.6% % total SA business tourists 54.4% 17.3% 28.3% 100.0% Business Travellers - 2016 No. business travellers 130500 27982 68772 227253 % total travelling for business 5.2% 4.4% 1.0% 2.3% % total SA business travellers 57.4% 12.3% 30.3% 100.0% Length of Stay - 2016 Average length of stay - nights 12.8 14.6 7.7 9.2 Most common length of stay 5-14 4 1 1 Spend - 2016 Average spend in SA per tourist R 15082 R 19100 R 4700 R 8100 Average spend in SA per Holiday Tourist R 17640 R 19600 R 4900 R 12900 Average Spend per Business Tourist R12 500 - R28 100 R7 700 - R35 300 R1 700 - R10 200 R 14900 Total Tourist Spend - Excl Capital spend R37.1bn R6.2bn R32.3bn R75.5bn Average pre-paid expenditure R26 900 - R44 500 R14 200** R 800 R 8100 Day Visitors - 2016 211755 699275 2750415 5076499 Source SAT Reports & StatsSA *SAT reports on Africa Land markets as all neighbouring country tourist arrivals, not tourist arrivals at border posts, we use actual StatsSA Border post arrivals. SAT percentages of holiday makers are on the same basis, but we apply to actual arrivals as indicative

Foreign Tourism To Gauteng Gauteng Overseas Africa Air Africa Land Total Total 1142895 293823 2890096 4305634 Length of stay 5.9-9.8 11.9 8.6 8.4 Share of total 45.2% 46.2% 42.0% 42.9% Spend per trip R 10848 R 17700 R 7000 R 8500 Overseas African Air* African Land Total Total Tourists 2016 2531046 635950 6877167 10044 163 Length of Stay - 2016 Average length of stay - nights 12.8 14.6 7.7 9.2 Most common length of stay 5-14 4 1 1 Spend - 2016 Average spend in SA per tourist R 15082 R 19100 R 4700 R 8100 Average spend in SA per Holiday Tourist R 17640 R 19600 R 4900 R 12900 Average Spend per Business Tourist R12 500 - R28 100 R7 700 - R35 300 R1 700 - R10 200 R 14900 Total Tourist Spend - Excl Capital spend R37.1bn R6.2bn R32.3bn R75.5bn Average pre-paid expenditure R26 900 - R44 500 R14 200** R 800 R 8100

Overseas Tourists Mexico 0% Rep. of Korea 1% Middle East 2% UAE 0% Saudi Arabia 0% Australasia 5% Other C&S America 1% Brazil 2% China 5% Philippines 0% India 4% Taiwan 0% Indonesia 0% Other Asia 3% UK 18% Germany 12% Canada 2% USA 14% Russia 0% Oher Europe 16% Source: StatsSA Netherlands 6% Italy 2% France 6%

255 800 North Africa 7% African Tanzania 17% East & Central Africa Other 14% Tourists Nigeria 29% Ghana 8% West Africa Other 6% Uganda 6% Kenya 13% Zimbabwe 28% Zambia 2% SADC Other 1% Angola 1% Botswana 9% 7 275 700 Lesotho 24% Swaziland 12% Malawi 2% Source: StatsSA Namibia 3% Mozambique 18%

Arrivals per province

International Tourists Detailed purpose of visit

Average length of stay per Province 6.00 2015 5.00 4.00 3.00 2.00 1.00 0.00 Eastern Cape Free State Gauteng KwaZulu Natal Limpopo Mpumalanga Northern Cape North West Western Cape

International Tourists - Most Visited Attractions & Landmarks West Coast Cango Caves Cape Agulhas Blyde River Canyon God's Window Cape Town township tours Lion and Rhino Park The Karoo Ostrich farms Beaches Wild Coast Whale watching Tour of Soweto Durban beach front Apartheid Museum Kruger Park The Garden Route Robben Island The Winelands Cape Point Table Mountain Cableway V&A Waterfront Cape Town Central City 0 200000 400000 600000 800000 1000000

Total numbers visiting attractions in Q1&Q2 2016 Gauteng Sandton City / Mandela Square 51% Apartheid Museum Eastgate Mall Tour of Soweto Mandela house (Soweto) Union Buildings Rhino and Lion Nature Reserve Constitution Hill Maropeng and Sterkfontein Caves (Cradle of Humankind) Lesedi Cultural Village Maboneng Precinct (e,g, Pop Art Theatre, Cinema, Gallery etc) 16% 14% 13% 13% 11% 9% 6% 5% 2% 1% n = 2 049 946 Source SAT Reports - 200 000 400 000 600 000 800 000 1000 000 1200 000

Domestic Tourism VFR Holiday Business Religious Total No. Tourists Trips 2014 20.7 2.8 1.6 2.2 28.0 No. Tourists Trips 2015 17.4 2.7 2.4 1.7 24.5 No. Tourist Trips 2016 17.3 2.6 2.0 1.7 24.3 Tourist Trip Growth 15/14-15.94% -3.57% 50.00% -22.73% -12.50% % Tourists 2015 71.02% 11.02% 9.80% 6.94% 100.0% Average Tourist Length of Stay nts(2015) 4.4 5.4 2.9 2.0 4.2 Average Spend per Tourist Trip in Rand (2015) 710 2170 1890 490 960 Total Tourist Spend 2015 - Rbn 12.4 5.9 4.5 0.8 23.5 Day Trips Day Trips 2015 (m) 224.8 Day Trips Growth 15/14-8.58% Day Trip Average Spend 380 Day Trip Total Spend Rbn 123.3

Domestic Tourism Province of Origin

Domestic Tourism Provinces Visited

Domestic Tourism Activities Undertaken

Top three trends Experiential Innovation and technology Inclusive