No Holiday For SA's Tourism Sector
Finweek English|19 March 2020
South Africa’s travel and tourism industry is struggling to grow the number of foreign visitors to our shores, and now the coronavirus is wreaking havoc on international travel. Although local stocks exposed to the sector are cheaply valued, the current local and global environment weighs heavily on the outlook for companies operating in this space.
Jaco Visser
No Holiday For SA's Tourism Sector

The number of foreign tourist arrivals in South Africa declined by 2.2% to 2.612m in 2019 compared with the 2.672m in 2018, according to data from Stats SA. Total arrivals, which include those from the rest of the continent, slumped 2.3% to 10.2m in 2019 compared with 10.4m the previous year, the data shows.

“We were hoping for a recovery,” says Tshifhiwa Tshivhengwa, CEO of the Tourism Business Council of SA. Couple the current global outbreak of the coronavirus with last year’s lacklustre arrivals, and “this is unknown territory”, he says (see sidebar on p.37).

The part of the industry – which can be split into accommodation, rental cars and airlines – that’s listed on the JSE, struggled to deliver decent returns to investors (see graph 1 on p.36). And it doesn’t look like it’s about to improve.

Suffice to say, SA, which lured a million visitors in 2018, has a miniscule listed tourism sector, consisting of Comair (in the airline category); Phumelela, Sun International and Tsogo Sun Gaming (in the gambling category); City Lodge and Tsogo Sun Hotels (in the hotels category); and Hosken Passenger Logistics and Rail (in the travel and tourism category).

The travel and leisure sector also includes the restaurants and bars category, which counts only three stocks among them: Famous Brands, Spur Corporation and Taste Holdings (which is now a jewellery brand owner).

Over the past three years those shares exposed to the travel and tourism industry performed poorly. Tsogo Sun – which split its hotel business off from its gaming venture last year – remains the largest among these stocks. On 12 June 2019, a day after the unbundling of Tsogo Sun Hotels, the combined share price of the two Tsogo stocks was R20.51. By 10 March, it had slumped to R12.64 for both – a 38% decline in less than nine months.

Esta historia es de la edición 19 March 2020 de Finweek English.

Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.

Esta historia es de la edición 19 March 2020 de Finweek English.

Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.

MÁS HISTORIAS DE FINWEEK ENGLISHVer todo
THE HEALTH OF SA'S MEDICAL SCHEMES
Finweek English

THE HEALTH OF SA'S MEDICAL SCHEMES

As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.

time-read
7 minutos  |
5 November 2021
The effect of Gilbertson's departure
Finweek English

The effect of Gilbertson's departure

With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.

time-read
3 minutos  |
5 November 2021
Making money from music
Finweek English

Making money from music

Why investors are increasingly drawn to the music industry.

time-read
3 minutos  |
5 November 2021
Conviction is key
Finweek English

Conviction is key

Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.

time-read
5 minutos  |
5 November 2021
The post-pandemic toolkit
Finweek English

The post-pandemic toolkit

How CFOs can use technology to support growth.

time-read
4 minutos  |
5 November 2021
Big city living exodus
Finweek English

Big city living exodus

Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.

time-read
3 minutos  |
5 November 2021
Big compact, big value
Finweek English

Big compact, big value

Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.

time-read
3 minutos  |
5 November 2021
On barriers to entry
Finweek English

On barriers to entry

There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.

time-read
2 minutos  |
5 November 2021
Fear and greed in one index
Finweek English

Fear and greed in one index

To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.

time-read
3 minutos  |
5 November 2021
Africa's largest data centre facility coming soon
Finweek English

Africa's largest data centre facility coming soon

Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.

time-read
3 minutos  |
5 November 2021