A close look at how tourism has mushroomed in post-apartheid SA

South Africa should be a major tourist Mecca. It has beautiful beaches, gorgeous wine country, big game safaris, luxury casinos, excellent shopping, and unbeatable weather. It even enjoys heat and sunshine while the rich world is covered in snow, which should make it an even more attractive destination. But for various reasons, we have found it hard to get the tourist numbers up where they should be. First, of course, it was apartheid that made SA a poor choice for the vacationing foreigner. Then, when apartheid ended, the country's reputation for crime and violence tended to keep the tourists away. However, things have steadily improved since 1994, and after the boost that hosting the World Cup gave the country, South Africa is finally coming into her own as a tourist destination. Given the huge amounts of money and the many jobs the industry generates, let's hope we can keep it that way. – FD

ALEC HOGG: One of the real dividends of the new South Africa has been tourism, which has come a long way since 1994. To take us through that journey is Gillian Saunders, who is Head of Advisory Services at Grant Thornton in Johannesburg and she's the Global Leader of Hospitality and Tourism at Grant Thornton International. Gillian, it's good to see, in 20 years, one sector of this economy that really has improved and mushroomed in many ways. If you go back to 1994 and to where we are today, how many more people with money (because that's really, what matters in an economy) are coming perhaps from the rich north?

GILLIAN SAUNDERS: Okay, I'm going to give you both figures. In terms of our total visit arrivals – and that was all we counted back in 1994 – we had about three-point-six million. Last year was 14 million. Within the three-point-six, just under seven-hundred-thousand were from overseas. We're now up to two-point-nine-million from overseas.

ALEC HOGG: So those are the numbers of the people with money – seven-hundred-thousand to two-point-nine million. That's quadrupling.

GILLIAN SAUNDERS: It's seven or eight percent on average, per annum, or something like that. The overall growth was six-point-nine percent per annum (I didn't do overseas by itself).

ALEC HOGG: The opportunities this created…let's just start off. If you're growing at that kind of growth rate, how many jobs were created in the sector?

GILLIAN SAUNDERS: Back in 1994, it was something like two-hundred-and-twenty-thousand jobs in the sector, and those were direct jobs in the sector. That's now at five-hundred-and-sixty-thousand (I think it is). I don't have the exact number. It's well over five-hundred-thousand, and that's an average of four-point-seven percent growth in jobs created in the industry.

ALEC HOGG: So people are coming to us. Jobs are being created. Infrastructural investment…

GILLIAN SAUNDERS: Well, that's been significant. We've trebled the number of hotels in the country and other sectors of the accommodation industry have grown – things we might have forgotten. We didn't really have casinos. We had some in the old homelands and we had many little ones. We now have 38 almost mega casinos in the country. We had no World Heritage sites. We now have eight World Heritage sites. We had no really good international convention centres. We have stunning ones in Durban, Cape Town, and Johannesburg as well as many other ones, so we really have seen the infrastructure grow. Car-hire fees: twenty-five-thousand back in 1994…sixty-five-thousand now.

ALEC HOGG: That's the economy. That's the invisible hand of Adam Smith. When you get to that point and if you look back at the last couple of years, are we continuing to grow? Is all that infrastructure that's been put in place…is that being utilised? Thirdly, are more people being employed by this sector?

GILLIAN SAUNDERS: Well certainly, the infrastructure's been utilised. Yes, we had a bit of a slump in 2011, a combination of the good years before 2010 when people put a lot more infrastructure in place, and the recessionary constraints on travel, which caused 'down' in travel, 'up' in supply, and we had a slump. We have worked our way out of that again though, 2012/2013…2013 in particular, was a good year for the industry, so we're using all the infrastructure.

ALEC HOGG: So last year was a good year.

GILLIAN SAUNDERS: Last year was a good year and 2012 was a good year. This year, the jury's still out, but it is about South Africa generally and our economic situation. While globally, markets are improving – you have some growth in the U.K. for instance – where we saw a decline for a couple of years, so there's good news there. We've always been constrained, though. We're still constrained by the Safety and Security image, which we have globally. That definitely stops us growing at the level we could and attracting the number of people we could.

ALEC HOGG: The Safety and Security image…so people still think it's a bit dangerous – coming here.

GILLIAN SAUNDERS: They do. We changed that a lot with 2010. We've changed it a lot because there are more and more people coming and having an experience that is fine. There are incidents against tourists, but it's no worse than many other tourism destinations for tourists – the crime levels.

ALEC HOGG: No holiday in hell anymore, as it was in PJ O'Rourke. If you go a little bit further than that, is it likely that this negative image South Africa's getting internationally from investors, will rub off at all on the tourism sector?

GILLIAN SAUNDERS: It will, because tourism is also generated by business activity. A lot of tourism is overnight travel for business reasons, trade, and investment reason, so if we start to contract or we continue the second quarter with no growth etcetera, we will start to see it in domestic and business tourism, in particular and that's still a very important component of the economy.

ALEC HOGG: Gillian, just to close off with, what about from the east?

GILLIAN SAUNDERS: It's starting to grow. China was nowhere in terms of morale because we didn't measure them in 1994. I think we're now at over four-hundred-thousand from the east, of which China is a quite significant one-hundred-and-eighty-odd thousand (or something like that), so we really are growing the emerging markets out of China. We're growing it out of Brazil to some extent, and India is growing quite nicely into South Africa.

ALEC HOGG: And how are they relative to the traditional markets?

GILLIAN SAUNDERS: I think they have different leisure travel needs. They like to experience different things. If you look at the Chinese travel pattern in particular, nearly all go to Sun City, so gambling's an important thing. Their consumption of things such as wildlife etcetera may be slightly different, so we need to work more on understanding those needs. They key market that we really need to understand, is Africa. As Africa becomes a consumer continent, we need them to think South Africa's the place to visit – not Paris, Milan, and London, which is where they currently aspire to go. We need to make Gauteng and Johannesburg just as exciting.

ALEC HOGG: Well, Gauteng is exciting and so is Johannesburg. Gillian Saunders: just as excited about her industry, and why not. Tourism has been growing over the last 20 years…exponentially, as you heard today. Gillian Saunders is Head of Advisory Services at Grant Thornton Johannesburg and Global Leader of Hospitality and Tourism at Grant Thornton International.