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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• South Africa ranks just ahead of Nigeria as Africa’s largest economy. It’s 31^st 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.

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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.

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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.