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Cablegate: South African Tourism Industry On a Positive and Rapid

VZCZCXRO3157
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #3678/01 2911458
ZNR UUUUU ZZH
R 181458Z OCT 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 2322
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

UNCLAS SECTION 01 OF 03 PRETORIA 003678

SIPDIS

DEPT FOR OES/PCI, OES/ENV, AND AF/S
DEPT PASS EPA/OIA,

SIPDIS

REF: Pretoria 3431

E.O. 12958: N/A
TAGS: ETRD EINV EAIR SENV SOCI CASC CPAS SF
SUBJECT: SOUTH AFRICAN TOURISM INDUSTRY ON A POSITIVE AND RAPID
GROWTH PATH

1. (U). Summary: The South African tourism industry has shown
significant growth since the country was democratized in 1994. Over
8.4 million people visited South Africa in 2006. Tourism
contributes more to the economy than the gold sector and that it
employs over half a million people. South Africa is expected to
host over 400,000 people during the FIFA World Cup soccer tournament
in 2010. Various government departments and organizations,
including the Department of Environmental Affairs and Tourism, the
Department of Transport, South African Police Service (SAPs), and
South African Airways are preparing for the World Cup. Crime and
skills shortages represent serious challenges for the industry. End
Summary.

---------------
Tourism Booming
----------------

2. (U) Hobbled by sanctions and domestic turmoil during the 1980s,
tourism in South Africa rebounded after 1994 and is today one of the
fastest growing sectors of the economy, contributing more than 8
percent of GDP. (Note Post arrived at USD values by using the
average annual rand/dollar exchange rate of 7.56 (2003), 6.45
(2004), 6.36 (2005) 6.77 (2006). Tourism contributed 8.3 percent of
the GDP in 2006, making tourism significantly larger than the gold
sector (which contributed 1.5 percent). End Note.


Tourist Arrivals Tourist Spending Percent GDP

2003 6,504,890 $7.13 bn 8.1
2004 6,677,839 $7.41 bn 7.4
2005 7,368,742 $8.79 bn 8.15
2006 8,395,833 $9.75 bn 8.3


3. (U) Most tourists come from Africa and the Middle East, followed
by Europe. Tourists from North America are relatively few. The
table below illustrates the tourists' arrival numbers by region of
origin in 2005 and 2006:

Arrivals by Region 2005 2006 Percent
Of Origin Increase

Africa and ME 5,356,576 6,267,576 17.0
Central Americas 47,818 54.421 13.7
North America 274,281 303,675 10.7
Australasia 95,818 108,425 13.2
Europe 1,308,634 1,381,881 5.6

--------------------
Government Priority
--------------------

4. (U) Tourism Business Council of South Africa (TBCSA) CEO Matsatsi
Marobe recently told EST Assistant that the industry employs over
500,000 people and is well aligned with the economic priorities of
the South Africa Government's Accelerated and Shared Growth
Initiative for South Africa (ASGISA), an initiative established to
increase GDP growth to six percent by 2010. The industry is job
intensive, women and small business friendly, geographically
disbursed, and an excellent launching pad for BEE and small-scale
entrepreneurship.

5. (U) The South African cabinet approved an International Tourism
Growth Strategy (ITGS) and a Domestic Tourism Growth Strategy (DTGS)
in 2003 and 2004. ITGS was established to increase the number of
foreign tourists, encourage longer stays, encourage and facilitate
transformation (empowerment of the previously disadvantaged people)
in the industry. ITGS funded tourism market studies which
identified Africa, North America, Europe and Asia as priority
markets. The government is now aggressively marketing South Africa
in these regions.

---------------------------------------
What Attracts Tourists to South Africa?
---------------------------------------

6. (U) Tourists come to South African for various reasons. Many
Europeans come for safaris or business conferences. Africans can be
lured by shopping or medical care. South Africa has eight world
heritage sites, and ecotourism is one of the fastest growing tourist
attraction areas. All tourists can enjoy an "African" experience in
a country where they can drink the water.

PRETORIA 00003678 002 OF 003

------------------------------------------
Room for Improvement With Business Tourism
------------------------------------------

7. (U) Eighteen percent of business tourists tour the country before
attending business meetings or international conferences while
twenty-two percent tour after these meetings. Even so, South Africa
Tourism (SAT) statistics show that only five percent of the 8.4
million people who visited South Africa in 2006 came on
business-related travel. SAT figures show that business tourists
spend on average USD 203.00 a day compared to the USD 70.20 spent by
leisure tourists. The Union of International Associations ranked
South Africa twenty-third as a conference hosting country in 2005,
and the International Congress and Convention Association ranked
South Africa thirty-first in 2006. Cape Town, Durban and
Johannesburg are the three most important convention sites.

--------------------------------------------- -----
Preparing for the 2010 World Cup Soccer Tournament
--------------------------------------------- -----

8. (U) SAT CEO Moeketsi Mosola stated at a tourism conference in
Durban in May that over 400,000 people are expected to come to South
Africa for the 2010 FIFA World Cup. A FIFA (world soccer governing
body) contractor Jaime Byron mentioned recently that they have
already secured 27,000 of the required 55,000 accredited rooms. The
Airports Company of South Africa (ACSA) CEO Monhla Hlahla reported
that preparations for effective air transport are well underway.
ACSA is progressing with infrastructural developments in major
airports to deal with the expected crowds during the World Cup.
Hlahla advised that the Department of Transport drafted an airlift
strategy in 2006, leading to the opening of new routes, and the
introduction of new services and operators. Hlahla said Air France
and British Airways have increased their flights to and from
Johannesburg, while China Eastern Airlines has now launched flights
to and from South Africa. Delta announced in September that it
planned to inaugurate a new route between New York and Cape Town in
March 2008 (REFTEL). South African Police Services SAPs) Divisional
Commissioner Arno Lamoer stated that the South African government
has budgeted USD 1.57 million for safety and security during the
World Cup and that SAPS plans to deploy 193,000 police officers by
2010.

----------------------------------------
Challenges Faced by the Tourism Industry
----------------------------------------

9. (U) DEAT Minister Van Schalkwyk stated in a recent tourism
meeting that crime remains a serious threat to tourism and could
have a devastating impact if not addressed. Tourists have reported
baggage theft at airports, hotel theft, credit card fraud and ATM
muggings. The rate of contact crime incidents such as car
high-jacking, assault, rape and murder is high in South Africa.

10 (U) There is a concern among travelers about the South African
Government's policy of requiring two blank pages in travelers'
passports. A query to South African Airways (SAA) confirmed that at
least 12 travelers per month are refused entry at O.R.Tambo
International airport (Johannesburg) because of failure to comply
with this requirement. EST Assistant made enquiries with a
Department of Home Affairs (DHA) official and was told that the
Immigration Regulations Act of 2002, 2(e) stipulates that a
traveler's passport must have at least one unused page for the
purpose of endorsing a visa or permit, and in the event of extending
a traveler's stay. The DHA official also said that to the best of
her knowledge South African missions overseas and airline carriers
are adequately informed about this regulation. The official also
noted that airlines should screen passengers' passports and refuse
boarding for those who do not comply with the rule.

-------
Comment
-------

11. (U) The South African tourism industry is a significant
contributor to the country's economic growth and employment, and has
demonstrated the success of the government's tourism investment and
marketing strategy. South Africans are very enthusiastic about
hosting the World Cup in 2010, but South Africa may have to solicit
external support for infrastructure development from countries such
as the U.S., Germany and Britain because of the shortage of skilled
labor. It remains to be seen weather the South African government
and the tourism industry will be able to overcome existing
challenges, such as distance, airline capacity, a relatively strong

PRETORIA 00003678 003 OF 003


exchange rate and an unacceptably high level of crime, and continue
to increase tourism's contribution to the South African economy. End
Comment
TEITELBAUM

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