The Outbound Leisure Market From South Africa April 2017 Gillian Saunders Allan Wantenaar for

Contents The Global Picture and Trends Study Methodology The Outbound Market from South Africa Size of Travel Agency and Wholesaler Market South African Outbound Travel and Affordability Estimates on Outbound Travel Numbers

Global International Tourism Growth 2015 4,5% arrivals growth 2015 3,6% receipts growth (blended local currency)

Global International Tourism Lower growth at 3,0% pa - 2020 – 3,3% 2020 – 2030 – 2,9%

Global International Tourism Almost 60% of arrivals are to emerging economies

Global International Tourism Growth at 5,3 % pa 2013 – 2020 – 6,1% 2020 – 2030 – 4,7% Africa reaches 134m arrivals

Global International Tourism Africa share grows from 3% to 7%

Global International Tourism

Global International Tourism

Global International Tourism

Global International Tourism

Global International Tourism

Global Outlook the long-term tourism growth pattern: Global growth in international tourism arrivals continues More moderate pace, from 4,2% per year (1980-2020) to 3,3% (2020 -2030): Substantial potential for further expansion in coming decades challenges maximising social and economic benefits minimising negative impacts the long-term tourism growth pattern: more moderate, sustainable and inclusive

Demographic Shifts Ageing The number of elderly will explode Surprisingly, 90% of this growth will take place in emerging markets Non-retirement will increasingly be a major theme.

The Wealthy In America over 50s control 75% of the country's wealth The UK’s 17 million Baby Boomers hold an estimated 80% of the country’s wealth Baby Boomers – aim to stay mentally and physically fit – "forever young" Travel is a high priority for Baby Boomers.

The Wealthy High Net Worth Individuals’ wealth grew 4% in 2015 to US$61.1 trillion The global population of HNWIs grew 4.9% to 16.11 m The US has largest HNW segment HNWIs expanded to 4.4 m - increase of 8.6%, the investable wealth grew by 9.4% to US$15.2 trillion. since 2008, US accounts for 28.6% of new HNWI wealth globally Asia-Pacific strongest rates of HNWI population growth – 9.4% to 5.1 m surpassed Europe with HNWI population 4.2 m Europe lower than global average growth - 4.9%, due to ongoing fragile economies The HNWI population is becoming more fragmented across the globe Ultra-HNWI - grew by 4.2% in 2015 and wealth by 2.5% Ultra-HNWIs accounted for ±35% of global HNWI wealth but only 0,9% of the global HNWI population.

The Consumer Psyche Will emerging market consumers adopt this Psyche? Cartography of the emerging consumer psyche - ConsumerShift Andy Hines Authenticity, Connection, Anti-Consumerism, Self-Expression, & Enoughness Modern, Post Modern, Integral "Mindful Consumption " – "Deep Travel" idiosyncrasies and detail "slow travel" boat, bike and train Give back to destinations "Carbon guilt" – geo-local travel "mass localisation" - not if, but when! Hyper-local sourcing Reflect my values Spending my money and time Declining trust in brands (gen Y) Will emerging market consumers adopt this Psyche?

Outbound Tourism

Outbound Tourism

The South African Market New wealthy class New middle class Promoting new travel experiences & destinations Economy / budget travel packages Growth of independent travel Regional market

Study Methodology Methodology: Research Tools Personal interviews with outbound leisure travel agencies:  ASATA membership list, past attendees to WTM Africa telephone interviews, online surveys, and a focus group workshop held in Johannesburg. Interviews with outbound travel market industry partners and associations Research and analysis of available statistics on the size of the outbound travel market StatsSA, ASATA, ACSA, key international destinations, population and income data, sales data from outbound leisure travel agencies, and other sources 

Study Methodology Key Survey Respondents:

The Outbound Market from South Africa The Travel Intermediary Chain: Include source - Source: Lubbe, B. A New Revenue Model for Travel Intermediaries in South Africa, 2005

The Outbound Market from South Africa Number of Travel Agencies and Wholesalers in South Africa 225 outbound leisure travel agencies 22 wholesalers in South Africa around 600 travel agency branches 5 Brands - Harvey World Travel, Pentravel, Sure Travel, XL Travel Leisure and Flight Centre - account for 50% of all travel agency branches 34 wholesaler branches

600 225 The Outbound Market from South Africa Number of Travel Agencies in South Africa 600 Travel agency branches 225 Travel agency head offices

Wholesaler head offices The Outbound Market from South Africa Number of Wholesalers in South Africa 22 Wholesaler head offices 34 Wholesaler branches

January (2017 YTD) Air Departures The Outbound Market from South Africa Number of Outbound Travelers from South Africa (2016) Total Departures 2.5% increase vs 2015 Total Air Departures -0.01% decline vs 2015 3,5 million 2.05 million Total Road Departures 3.96% increase vs 2015 9 957 Total Sea Departures 71.11% increase vs 2015 5,55 million in 2016 January (2017 YTD) Air Departures 0.6% increase vs 2016 Source: Stats SA, Tourism Migration Survey, 2016

The Outbound Market from South Africa South Africans who can afford to Travel 400,000 Households (3% of households) 18 Years or older (Head of Household) 2.1 People Per Household Income Threshold R51,200 per month (R614,400 per annum) 860,000 Individuals (3% of population) Big income disparity Source: Stats SA, 2011 Census

Assumption on % Leisure Visitors South Africa Leisure Visitors The Outbound Market from South Africa Estimating Outbound Travel Market - Key Destination Arrival Data Destination Assumption on % Leisure Visitors All SA Visitors South Africa Leisure Visitors USA 15% 123 869 18 580 Australia 20% 57 600 11 520 Britain Actual (12,4%) 231 197 28 615 Germany * 185 590 27 838 Indonesia 75% 13 795 10 346 Zanzibar * 95% 13 152 12 494 Mauritius 101 954 96 856 New Zealand 30% 17 008 5 102 Thailand 75 825 72 034 Other Destinations 5% 1 230 010 61 501 Total 2 050 000 344 887 Source: Various Statistical Publications from each Destination / Country, 2016 * - Indicates projection

140,000 leisure travel policies The Outbound Market from South Africa Estimating Outbound Travel Market – Travel Insurance Sales 75% Market Share Leisure Travel Policy Market 105,000 leisure travel policies Leisure Travellers Covered 140,000 leisure travel policies Leisure Travellers Covered 35,000 people 25% of policies are for families (2 people) 25,000 people Credit Card Cover 200,000 leisure travellers Excludes un-ensured travellers

250,000 to 310,000 including Independents outbound leisure travellers The Outbound Market from South Africa Estimating Outbound Travel Market - Travel Agency and Wholesale Sales 75% Market Share of outbound intermediary chain 250,000 to 310,000 including Independents Assuming 20% book through this channel 150,000 to 186,000 outbound leisure travellers Bookings through dominant players 200,000 to 250,000 through outbound intermediary chain in total – adjusted for double counting 250,000 to 310,000 outbound leisure travellers Including traditional intermediary channel and Independent / Online

Summary of Findings and Conclusion 860,000 Potential Travelers Conclusions: Not Travelling due to various reasons South Africans that can Afford to Travel +/- 345,000 Travelers 200,000-310,000 Travelers Outbound Destination Arrival Estimate 200,000-250,000 Travelers Travel Channel Sales Estimate 200,000 Travelers Travel Insurance Proxy Estimate Low End Estimate

Summary of Findings and Conclusion Conclusions: Market 200,000 to 345,000 travelers (from 400,000 households) 225 travel agencies and 22 wholesalers (dominated by key players) South African's are not very adventurous Market under pressure Exchange rates Cost of travel Pressure on disposable income VISAs Growth potential exists Key considerations: Connectivity to markets and product Cost of Travel / Competition Culture of Travel (also growth of independents) Currency Stability / Economic Climate Ease of Travel / Booking

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