Market monitor: South Africa at a glance

South Africa business travel outlook: To reduce exposure to commodity price volatility, South Africa is diversifying its economy—particularly by expanding services. The financial, mobile telecommunications, tourism, transport and logistics sectors have all performed well.

Plan for economic modernization could boost already-expanding business travel.

Corporate spending on travel to, from and within South Africa amounted to US$11 billion in 2018, according to BCD Travel analysis of data from Oxford Economics. Domestic trips accounted for almost 60%. Growth in spending averaged 6% a year between 2013 and 2018. Watch for acceleration of more than 7% annually through 2023 as domestic business travel spending strengthens.

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Economic environment

Economic growth and business travel spending

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  • South Africa ranks just ahead of Nigeria as Africa’s largest economy. It’s 31st in the world, with an economy equivalent to Ireland’s.
  • Abundant natural resources are key. Gold production is steadily falling, but output of platinum, coal, nickel and other minerals is rising in response to higher global prices.
  • To reduce exposure to commodity price volatility, South Africa is diversifying its economy—particularly by expanding services. The financial, mobile telecommunications, tourism, transport and logistics sectors have all performed well.
  • Economic growth is hampered by the urgent need for reform to reduce the cost of doing business; a failure to successfully deal with corruption; and depressed consumer and business confidence.
  • In August, South Africa’s finance minister announced a plan of economic modernization, reforms and job creation designed to kick-start growth.

Air

International travel

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  • International travel expanded 4% annual over the last five years. The annual volume of departing passengers grew 5%, and arrivals increased 3%. Overall growth is expected to stay the same through 2023, although arrivals will expand faster than departures.
  • Visitors to South Africa account for 62% of international travel. More than a fifth of overnight visitors arrive from Zimbabwe. Over the next five years, arrivals from the U.K. and U.S. will grow 11% per year, on average; each country will account for 6% of visits.
  • Mozambique is the top destination for South African travelers. Zimbabwe, Swaziland, Botswana and Lesotho are popular, too.
  • State-owned South African Airways (SAA) is the country’s largest airline, accounting for about a third of flights departing from South Africa’s six largest markets. Combine SAA’s legacy operations with flights operated by its low-cost carrier, Mango, and the airlines account for more than half of departures from Johannesburg (including secondary airport Lanseria) and George, and more than 40% of departures from Cape Town, Durban and Port Elizabeth.
  • SAA’s biggest domestic rivals are Comair, which flies British Airways-branded flights between major cities, and low-cost carrier Kulula, also affiliated with BA.
  • Rapidly expanding FlySafair is increasing low-cost competition.

Accommodation

Hotel demand

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  • Demand for hotel accommodation in South Africa dropped 14% between 2013 and 2018. Room nights booked by domestic travelers declined, on average, 7% per year.
  • International demand was more resilient, expanding 5% a year over the same period. It’s expected to grow at this rate through 2023.
  • Local hospitality, gaming and entertainment group Tsogo Sun is South Africa’s largest hotel chain. It operates 83 hotels under different brands, among them: economy tier SUN1; midscale StayEasy; upper midscale SunSquare; and luxury Maia.
  • Following its 2014 acquisition of local chain Protea and subsequent merger with Starwood, Marriott is now South Africa’s second-largest chain with 63 hotels. Most are upper midscale Protea properties.
  • City Lodge Hotel Group operates 55 select-service hotels.

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