Examining The Economy Environment Of South Africa Tourism Essay

South Africa is known by Republic of South Africa as its functionary name. It is a state near the Indian Ocean on the E, the Atlantic Ocean on the West, the neighbored states Lesotho, Swaziland, Botswana and Namibia and located at the south tip of Africa continent. South Africa enjoys a moderate and pleasant clime, with about whole twelvemonth ‘s cheery yearss. General speech production, there is no large difference among the chief metropoliss in footings of their clime.

South Africa owns the colourful population that about 77 % are black, 11 % are white and 9 % are “ coloured ” . As it has wholly 43 million people, English is widely used one the 11 officially recognized linguistic communication. Rand is the currency used.

Mentioning about South Africa ‘s diversion, leisure and touristry, one has to acknowledge that South Africa is one of the most cryptic, enrapturing and diverse states of the universe. It shows the perfect alien brotherhood of the landscape, the history, people and civilization. It is an perfectly attractive and popular tourer finish and it supports the state gross in an extent. Its chief noteworthy attractive forces are the picturesque and diverse civilization, the game militias and the Parkss, and the extremely regarded local vinos. In late old ages, diversion, leisure and touristry in South Africa has seen high growing demoing the highest degree since 1998. First of all, South Africa has the best transit substructure, which gives the large support to the touristry industry as there are more than 70 international air hoses and their national bearer. Second, South Africa is a fantastic year-around finish that makes game watching and plunging easier and available all the seasons. Around Christmas and New Year every bit good as the Easter periods are the peak seasons. The game militias have all the large five-lion, leopard, elephant, rhino and buffalo both in the state parks or the private Parkss. Third, large metropoliss in South Africa are with modern comfortss. Hilton, Hyatt and Holiday Inn provide the luxury service ; H2O flow, visible radiations work and multi-lane main roads environment metropoliss ; or even the 53 digital Television channels.

Business touristry in South Africa

South Africa is a would-class finish to accommodate the concern organisers, inducement groups, company preparation conferences and meetings and events. South Africa builds the first criterion convention installations in the major metropoliss. Since 2001, there are more than 1700 convention locales across states.

South Africa is an active finish and suited for making concern as presently it ranks the 28th by the Union of International Association criterion ( UIA ) as the top meetings finish ; and it ranked 18th by the Foreign Direct Investment ( FDI ) as the most attractive foreign investing finish, in effect, South Africa hosts 23 % of all the meetings in Africa.

South Africa owns an enviable path record, every twelvemonth there are about 860 international convention events. In 2006, South Africa hosted 25,917 exhibitions with a entire 3.7 million visitants go toing.

International touristry

South Africa is the universe ‘s adventure capital metropolis, with its particular bright atmosphere, rich civilization, the inspiring mountain or ocean air and the nature beauty and wildlife. The “ SA Gourmet Festival ” event, which is a jubilation of everything culinary ; the “ Wet ‘n Wild Canyoning ” is the event about escapade athleticss ; the “ Blessed with Bountiful Bling ” is a immense resource of shopping in South Africa ; the “ Thulamela, Ancient, Kingdom ” is the best manner of depicting South Africa cultural and historic features ; and the “ Soekershof ‘s Spirit ” expresses religious South Africa.

Local travellers

Peoples populating in South Africa, the biggest advantage is there is no demand to travel far off for basking the fabulous vacations. The national Parkss and the interested topographic points will convey ne’er ended nowadays. There are several most interested topographic points in South Africa, for illustration, Table Mountain, Robben Island, the Garden Route, Kwazulu-Natal Beach, Namaqualand, Cradlfe of Humankind, Kruger National Park, the Drakensberg Mountains and Soweto.

Economy Environment

The South Africa economic system is the largest in Africa continent and 24th largest in the whole universe. Due to the early in-migration from Europe and the strategic importance of the Cape Sea Route, it has experienced a different history from other states in Africa that it is the most economically, socially and infrastructural developed state within the continent. Here is a chart shows the tendency and historic development in South Africa economic system.


Gross Domestic Product

US Dollar Exchange



0.77 Rand



1.47 Rand



2.58 Rand



3.62 Rand



6.93 Rand



6.36 Rand

( hypertext transfer protocol: //en.wikipedia.org/wiki/Economy_of_South_Africa )

In 1652, the South Africa economic system had its beginnings of the Dutch colonists. The diamonds and gold discovering in 1870 and 1886 transferred the economic system into a resource dominated one. The authorities started seting Torahs separating between different races in 1948 and they had the first multi-racial elections in 1994. In 2005, the agribusiness contributed 3.4 % of GDP while services accounted for 65.1 % .

South Africa has its ain specific economic system theoretical account as it has a two-tiered economic system, due to its disparate economic system development. One viing with developed states, and other is merely with the most basic substructure. Therefore its ain industrialized and productive economic system signifiers many features relations with developing states ; include formal and informal divided labour sectors, uneven distribution of wealth and income. The primary sector is good developed based on excavation, services, agribusiness and fabrication.

( hypertext transfer protocol: //www.heritage.org/index/country.cfm? id=SouthAfrica )

The economic system is 63.2 % free in South Africa, which ranks the universe ‘s 57th freest state and 2.9 % higher than World Average ( free economic system per centum ) 60.3 % . Since from 1995, the economic system free ratio has somewhat 10 % addition.

The economic system freedom policy is influenced by the economic system reform. A decennary of economic system reform has bought large benefit in growing rates increase ; HIV/AIDS disease control, offense lessening, and high employment remain serious jobs.

( hypertext transfer protocol: //www.heritage.org/index/country.cfm? id=SouthAfrica )

Business freedom-71.2 %

The freedom goes through the whole procedure from get downing a concern until close it. Get downing a concern takes an norm of 31 yearss, and 12 yearss shorter that compared to the universe norm of 43 yearss. Applying and obtaining the concern licence takes less than the universe norm of 234 yearss and 19 processs. Besides the same degree, shuting a concern is consecutive and reasonably simple.

Trade freedom-74.2 %

There is 15 % points is recouped from South Africa ‘s trade freedom mark due to the non-tariff barriers. The weight mean duty rate was 5.4 % in 2005. There are some obvious grounds augment the cost of trade, for illustration, the restriction of import and export, service market barriers, the overproduction of the proficient criterions, weak enforcement of the policies, inordinate ordinance, hapless protection of rational belongings rights and so on.

Fiscal freedom-69.5 %

There are several types of revenue enhancements exist in the financial facet: income revenue enhancement, corporate revenue enhancement, value-added revenue enhancement ( VAT ) , belongings revenue enhancement and capital additions revenue enhancement. Harmonizing to the market survey figure, it shows clearly that the top income revenue enhancement rate is 40 % and the top corporate revenue enhancement rate is 29 % . The most recent old ages, entire revenue enhancement gross occupies 24.6 % in GDP

Freedom from government-76.8 %

In some sectors, the monopolistic control to some endeavors is still exerted. Recent old ages, authorities disbursement peers 27.8 % of GDP. The authorities expenditures include transfer payment and ingestion.

Monetary freedom-77.2 %

Entire 10 % points is reduced from South Africa pecuniary freedom mark for policies and domestic monetary values. Relative monetary values explain most of the South Africa pecuniary state of affairss and the pecuniary freedom mark. By and large the monetary values are set by local market ; nevertheless, authorities besides intervenes and adjudges it in the sectors of fuel like coal, crude oil and paraffin. One more thing demand to be paid attending is that rising prices still bing and it is moderate, mean 4 % between 2004 and 2006.

Investing freedom-50 %

South Africa permits foreign investing in most sectors without the restricting its signifier or extent generally. “ Investment growing rates would hold to about halve from their degree of the past four old ages ( 11.6 % ) , and family disbursement would hold to turn negative ( from 7 % growing over the past four old ages ) to do gross domestic merchandise ( GDP ) growing to fall below zero. “ Le Roux pointed out that historically state of affairs and the future tendency. In 2008, indicating out South Africa investing, PG Bison opens R1.3 billion board mill, Nissan Diesel has opened R10.9 million production and ware house installations ; and Heineken will construct its first local brewery on the South of the Johannesburg.

Fiscal freedom-60 %

The JES Securities Exchange in South Africa is one of the universe ‘s 20 largest, which means the capital markets are developed good. In mid-2006, there were 184 insurance companies bing. The Bankss must hold 25 % percent black ownership by 2010 under the Financial Services Charter.

Property rights-50 %

Judiciary section of South Africa is independent, but at that place has inconvenient of the societal organisations and economic belongingss. To state farther, the tribunals are inefficient, overburdened, underfunded, short-handed.

Freedom from corruption-46 %

Corruptness is another large job bing in South Africa ‘s economic market system. Until 2006, it ranks 51st of 163 states in Transparency and International ‘s Corruption Perceptions Index.

Labor freedom-57.5 %

Labor cost is low in South Africa, exuberant work force and low rate of payment conveying the South Africa 57.5 per centum of labour freedom. Inflexible employment ordinance influences the full productiveness and employment chance, it makes the negative consequence. Besides, there has a hug possible use of the labour market, and it will play more of import function in the overall economic system market.

Highlands Country House Hotel,



Highlands Country House Hotel is a Boutique Hotel in Kenilworth, Cape Town City. It is close to the golf class and the beaches on the Atlantic Ocean and Indian Ocean, and is merely 20 proceedingss off from the metropolis centre. It has been the in private owned Country House abode.

Highlands Country House Hotel offers a pool suites, executive suites, luxury suites every bit good as a honeymoon suite. Each room overlooks the Italian Garden and the two sparking pools. For the hotel service, it has the sofa, library and the private saloon. The particular of the hotel is the conservatory ; it is a all right dinning eating house with tapers, looking over the pool and garden in the hotel.

For the installations, Highlands Country House Hotel has a swimming pool with massage. The sofa is found next to the anteroom. Highlands Hotel notices that most of the hotel do n’t hold library, hence they have a little library with good books and diaries.

Although it is merely a boutique hotel, it has a council chamber. The council chamber is designed for 12 seats with classroom manner. During the interruption, tea and java are served at he sofa.

SWOT analysis of Cape Town


Good basic substructure

Established touristry economic system

Weather and seasons are opposite with Europe and North America

Lead finish for international tourer in South Africa

World-class accomplishments base

Cape Town ‘s planetary trade name equity


Infrastructure restrictions ( conveyance, etc. )

Non-representative industry

Limited direct air capacity

Limited concern and leisure touristry transition

Seasonal touristry industry

Previous weak exchange rates inflated costs a†’ monetary values have remained high


Events development and attractive force

Addition of distribution mercantile establishments

Lager market for local production, particularly for African linguistic communication merchandises

Turning the domestic black market

Increase direct international entree

Decrease in the cost of start-up equipment ( lower entry barriers )

2010 World Cup ( increasing public presentation in bing international markets )



Marco factors – safety, currency

Lack of transmutation ( skewed economic system and spread of benefits )

Environmental impact

Some county recoup costs in their domestic market ( local people can non finish )

Limited private sector indorsement and back up the activities

Market analysis of Cape Town City

Cape Town City is in the South of Cape Town and is the most popular metropolis in South Africa. The moniker of Cape Town is “ The Tavern of the Seas ” . Why is Cape Town City celebrated? It is because of its beautiful natural landscape such as Table Mountain and The Cape of Good Hope. Often regarded as one of the most beautiful metropolis in Africa, Cape Town is one of the most popular tourer finishs. Tonss of tourers come for sight-seeing yearly.

Cape Town City is the economic Centre of the Western Cape in South Africa, therefore it become the regional fabrication industry Centre. Besides it is the export seaport of ware. Every twelvemonth thousand of tourer comes to see relations or travel for sight-seeing, so the other gross of economic system is come from touristry. Cape Town is the capital of Western Cape and is the National Parliament of South Africa, so Cape Town is the led to increase of authorities gross.

Harmonizing the economic system development of Cape Town City, it offers different types of market sections. There are some major marks markets focus on: include leisure invitees, travellers, concern people, and local occupants.

Leisure invitees: As the tourers know Cape Town City is the most popular finish in South Africa. Besides the season and conditions are antonyms of Europe and North America, therefore the high season is from October until March. Christmas is the highest watercourse of people that in the few months. Lots of people come to bask the sunlight and observe the Christmas, besides the metropolis have several well-know natural characteristics that attract tourer, specially the Table Mountain and the Cape of Good Hope. Except to hold a summer Christmas, watching giants is besides popular for the tourer. The Southern Right Whales are seen off the seashore during the high season. The low season is from April until September. The tourer will diminish during that several months, but it still have some tourer to see, because it is the summer vacation in Northern Hemisphere. The other ground is South Africa have their local air hoses, South Africa Airlines, it become more convenient for the tourer to reaching.

Business people: In recent twelvemonth, tonss of concern people come to hold their meeting therefore it lets the room rate and the hotel gross addition in the low season, besides it make ripple consequence in cordial reception industry that provides the chance. It is because the metropolis hosts many conferences and some of the conferences are peculiarly in the International Convention Centre ( unfastened in 2003 ) . Except the conferences, Cape Town City is the export seaport of South Africa.

Local occupant: The plain twosomes are around 30 old ages old and they do non hold kids. They are good for the seasonality with significant growing potency since they need self-catering and timeshare adjustment. Independent immature twosomes and households are below 50 while most of them have kids at primary and high school. They like outdoor activities such as mounting, shopping and the metropolis amusement. They are large Spenders. Golden active twosomes are around 50 and do non hold any kids populating with them. They have high income and pass a batch during vacations. They like shopping but are monetary value sensitive. They besides like nature touring and eating outside.

2010 World Cup represents important chance for the finish in footings of turning new market and prolonging growing from bing market.

Major Economic Challenges


The low season is from March until September. At that clip, merely few tourers come to sight-seeing, except visit their relations. The hotel gross will diminish and the economic system will go slower.


The offense over the past few old ages have demonstrated an bettering state of affairs, besides the drug related offense are still increasing. Incidence of slaying still highly high, stand foring an one-year of slaying rate is half per centum and efficaciously an norm of 5 slayings every twenty-four hours.


Environment is the strongest ground to pull the touristry of the metropolis ‘s economic system. The probe of the University of Cape Town, each household has 2 autos or above, therefore it will go more air pollution. Besides the growing of economic sciences, many people become rich, they have money to construct house, to purchase new furniture, so they will flux away the old one, because of that, it become more godforsaken pollution.

Social and Human

Cape Town is face with huge societal and economic sciences challenges, due to the charges of several old ages, so it development in extremely skewed distribution of income and wealth. The turning degree of destitute, out of place lodging and the hapless wellness position ( particularly AIDS ) , because they do n’t hold the cognition about the wellness.

Transportation system

There is an increasing figure of private autos. It worsens the job of air pollution. Besides, public conveyance is slow and uneffective. There is no coordination between stakeholders.

Government intercession

Lapp as all states in the universe, South Africa economic has intervened by authorities. The mission is to make the conditions that make the economic more efficiency and doing pareto betterment. Frankly speak, authorities control the monetary values of crude oil merchandises, public-service corporations, etc. As we are opening a hotels in South Africa, that consider as a touristry industry. There are some schemes are used: VAT and Subsidies and Environmental controlling.

Value-added tax

In South Africa, there are 14 % VAT are added for every merchandises. It can increase authorities ‘s income and they can pass it for the county that makes it develops steadier.


Government provides subsides to the international investors, little and new companies. There are some plans which are provided to assist them: Small Medium Enterprise Development Program ( SMEDP ) , Skills Support Program, Industrial development zones ( IDZs ) , Foreign Investment Grant ( FIG ) and Strategic Investment Program ( SIP ) . It can forestall monopolies and back up the company to get down their concern.

Environment Controling

The Department of Environmental Affairs and Tourism ‘s is one of the sections which supervising the environment developing. For the negatives outwardnesss, it will step in to rectify it. Such as: difficult revenue enhancements for pollutions. It protects the public goods and assets that besides consider of touristry merchandises. In add-on, authorities besides concern on instruction. It promotes societal consciousness that shows the negative impact of the state.


When we are speaking about Demand, there are two exclusions to the jurisprudence of demand: When consumers see high monetary values as exclusivity and when consumers expect monetary values will lift in the hereafter. As our hotel is located in South Africa, there are some factors would impact our demand of consumers.

Changing the gustatory sensations or manners of consumers

Presents, South Africa is developing its touristry industry. It promotes and attracts the tourers to go. This tendency can convey the tourers in and increase the figure of hotel ‘s possible clients. As 2010 FIFA World Cup would be held in South Africa, it can force the people to come here and supply more chances for hotels to run into the mark market.

Disposable income of consumers

The disposable income of people affects the demand straight, and it is considered with these two sorts of good: superior goods and inferior goods. When disposable income rises, people will purchase more superior goods ; inferior good is as income rises, its demand will fall. Obviously, hotels are categorized as superior goods as epicurean service and merchandises are provided. When the people have higher income, they are more willing to bask the high quality service and experience and pass more.

Substitute goods and Complimentary goods

There are two sorts of goods that can straight or indirectly affect the demand. Substitute goods – an addition in monetary value for one leads to increase in demand for other. For illustration: if the other hotels increase their room rates, demand of suites in hotels non following the monetary value alteration additions. Complimentary goods – an addition in monetary value for one leads to diminish in demand for other. For illustration: if the electricity company increase the monetary value of electricity, it will impact our disbursals and our room rate might increase so the demand might diminish.

Our Ad method

The right advertisement method can make our possible consumers with low disbursals. We will utilize the cyberspace and tour usher to publicize our hotel. It can increase the demand.

Consumption chances

Leisure clip and vacation besides can impact our demand. When the people have more vacation and leisure clip, they will go more and pass more in touristry merchandises.

Product quality

Comparing with the other same type of merchandises, it besides can impact our demand. As our hotel provides the high quality service and suites, compares with the other same degree hotels, the demand will increase.

Elasticity of demand

When demand is sensitive to monetary value alterations, it is elastic. Normally, when the hotel room rate is increased, people would non come and travel to another hotel alternatively. It shows that the demand snap of hotel suites is high. However, there are some factors might act upon the snap of demand: necessity of goods and service, complimentary and utility goods, usefulness and monetary value, and consumer consciousness.

As South Africa is keeping the World Cup in 2010, even if the room rate rushs, tourers will still necessitate adjustment in hotels. The demand of hotel suites will be inelastic by so.


As monetary value rises, measure supplied besides rises ceteris paribus. Apart from monetary value, there are certain factors impacting the snap of supply.


Presents, owing to the betterment of engineering, PMS ( Property Management System ) is frequently used for hotel operations. Fidelio, POS system and CRS help better the efficiency of work. It increases the productiveness at the same cost. For illustration, POS ( point of sale ) system is used in hotel eating houses. It saves clip for the staff to pass on with the chefs and hence makes service more efficient and increases turnover chances. It besides can better the quality and value of merchandise and service.

Taxs and subsidies

VAT is the revenue enhancement that value added to the goods at each phase of production and it will increase the production cost. Every resource is straight affected by VAT which increases the operation disbursals and liability of concern dealing. The measure of supply will be decreased because of higher production cost. In South Africa, tourers can return the VAT on going at the point of issue. Basically, it would non impact the demand and supply.

Costss of production

The production costs affect supply straight. In South Africa, sufficient black economic authorization is provided, comparing with the local occupants and white people hired. The labour cost is low and there is a immense labour beginning. It increases productiveness and decreases disbursals.

Elasticity of supply

When the supply of goods is affected easy, it is considered to be elastic. The supply of hotel suites is elastic. For case, the invitees reserved a dual room. Yet, when they arrived, they brought one more invitee and needed a ternary room. The hotel was to the full booked. In this instance, the hotel added an excess bed in the room and charged them a rate lower than that of a ternary room. It means the supple of suites is elastic.

Other factors act uponing the snap of supply are clip period, handiness of stocks, trim capacity and flexibleness of capacity.

Major costs

There are both fixed costs and variable costs incurred by hotels. Fixed costs are incurred no affair the hotel is in concern or non. They could be administrative and direction fee, land, edifice, rent or rental disbursals, belongings revenue enhancements, insurance, involvement disbursal, depreciation and amortisation. Variable costs are costs incurred by the operation of concern. They increase as end product additions and frailty versa. In the instance of hotels, variable costs could be the cost of nutrient gross revenues and drink gross revenues, wages and rewards, paysheet revenue enhancements, selling and advertisement disbursal, telephone disbursals, wash disbursals, guest supplies, cleaning supplies, office supplies, public-service corporation costs and guest transit, etc.


Gross peers gross revenues. The difference between gross and net income is that gross includes costs. The entire gross may include besides authorities subsidies, revenue enhancements collectible and venture capital. In a hotel, the major beginning of gross is the suites section. The 2nd largest beginning is the nutrient and drink section which includes merchandising nutrient and drinks in hotel eating houses and bars.

Profitableness and net income maximization

Net income is calculated by deducting entire gross by disbursals. Most concern determinations are made based on profitableness. As hotel room rates change harmonizing to the seasonality factor, the profitableness varies from season to season. In South Africa, the high season is from November to January. Demand of hotel suites is the highest at that clip while supply does non alter. Hotels forecast the degree of demand with the aid of output direction plans and raise the room rates to the point where equilibrium is reached. The profitableness during high season is the greatest as both the monetary value and demand are at their highest point and frailty versa.

As for hotel eating houses and bars, the profitableness is comparatively high. Hotel invitees are normally large Spenders. Since they non merely bask the epicure, but besides the professional service and the elegant atmosphere of the eating house, bill of fare monetary values in hotels are set above the mean degree of local eating houses. Besides, the figure of screens and place turnover rate do non depend on the seasonality factor every bit much as the merchandising of hotel suites as they serve both hotel invitees and non-hotel invitees.

To maximise the net income generated from the nutrient and drink section, the F & A ; B director and the executive chef have to do wise determination in the buying procedure. They should choose the provider who can present the right quality and measure of merchandise at the right clip at the right monetary value.

As shown in the informations collected by UNWTO in Tourism Highlights 2007 Edition, in 2006, as was the instance with international tourer reachings, Africa achieved the strongest growing which was 10 % . It has been the taking part for the 2nd back-to-back twelvemonth. The growing of South Africa was 13.9 % and it accounted for 20.6 % of entire figure of international tourer reachings in Africa. In footings of international touristry grosss, South Africa made 7,875 million dollars and had the largest portion ( 32.4 % ) in the African part.

A house determines the monetary value and measure of end product to bring forth the greatest net income. It minimizes the costs of labour and production. In South Africa, the labour cost and cost of natural stuffs are low. It provides an advantage for houses to make the point where fringy gross is equal to fringy cost.


As the touristry industry in South Africa is dining, it is likely to be profitable to put in the cordial reception industry at that place. Although it is confronting jobs like the deficiency of efficient conveyance and substructure, serious air and H2O pollution and high offense rate, the clime antonym with Europe ‘s and North America ‘s is decidedly a natural advantage. Hotels are maximising their net income by minimising the costs of production and making economic systems of graduated table. Last but non least, the FIFA World Cup 2010 will pull immense flocks of tourers from all around the universe and it will hike the economic and touristry development of South Africa.