Tourism accommodation growth slows, but sector remains a bright spot in a flagging economy

The South African economic data from June have been poor and the economy is now widely expected to have contracted by as much as 1% in the second quarter (Q2) after posting surprisingly robust growth of 1.9% in Q1. 

On an annual basis, mining production fell 8% in June, manufacturing output by 3.5% and retail trade sales by 2.5%.

https://www.dailymaverick.co.za/article/2022-08-22-south-africa-sees-glimmer-of-hope-despite-talk-of-a-global-recession/

Rolling blackouts, the aftermath of KZN’s April floods, slowing global growth, rising domestic interest rates and surging inflation are all combining to deflate South Africa’s economic recovery. 

Still, there are some bright spots on the horizon. Unshackled from the onerous restrictions to contain the fading pandemic, tourists with the means are still slaking their pent-up demand. Tourist accommodation data for June remained buoyant, though the rate of growth is braking. And occupancy rates remain below pre-Covid levels. 

In the year to June, total income for the tourist accommodation industry increased by 50.1% in June 2022 compared with the same month last year. This points to a robust, if slowing, rebound in the overall tourist sector. In May, the annual increase was 92.6% and in February it was a sizzling 145.6%. 



Base effects are clearly in play here, but that need not detract from the promise in the numbers. Tourist accommodation and the wider sector play vital roles in the economy. Overseas tourists bring in hard currency, and when they convert that, spend rands that would otherwise not have been spent here. Tourists, both foreign and domestic, support businesses big and small. The opportunities for “inclusive growth” – to use one of the current terms of art on this front – are many. 

The sector is also labour-intensive, providing desperately needed jobs against the backdrop of an unemployment rate of 34.5%. Much of the work is low-skilled and low-wage, but every job counts. And it’s not all menial work. Guiding in its many guises and other tourist services require skills and know-how and command decent wages.

Stats SA will on Tuesday release its Quarterly Labour Force Survey for Q2, which will include the latest reading on the unemployment rate. Tourist accommodation alone cannot whittle that number down. But income growth in the sector surely means that it is one of the few industries that is actually creating jobs at the moment. DM/BM