South Africa's Tourism Resurgence: A Boost for JSE-Listed Firms

South Africa's tourism sector is witnessing a remarkable revival. After a significant downturn caused by the Covid-19 pandemic, the latest data indicates a surge in visitor numbers, offering a sigh of relief to many businesses, especially those listed on the Johannesburg Stock Exchange (JSE).

Stats SA and The Outlier have furnished promising statistics, showing that in October 2023, South Africa welcomed 731,108 visitors—a staggering 888% jump from the 73,988 arrivals recorded in October 2020. Together with departures and transits, there were 2.65 million travellers moving through the country in that month alone. These travellers comprised 28.9% South African residents and a notable 71.1% foreign tourists, of whom 26% came from overseas, predominantly for holidaying purposes, making up about 96.4% of all tourists.

While these figures still lag behind the pre-pandemic peak, the upward trend is heartening and heralds a rebound of tourism in South Africa. This rejuvenation is palpably benefiting several JSE-listed companies.

A prominent example is Zeda, the parent company of Avis car rental, which announced a robust performance for the financial year 2023. Avis experienced a 12% growth in revenue, amassing R6.66 billion, buoyed significantly by the influx of inbound travellers and a rise in corporate customers. These segments alone accounted for revenue growth of 98% and 48%, respectively. Consequently, Zeda enjoyed a 17% hike in EBITDA to R1.85 billion and a notable increase in operating profit before capital items to R885 million.

Meanwhile, hospitality giant Sun International also cashed in on the tourism uptick, seeing a 26.9% surge in resorts and hotels income to R1.4 billion in the interim results for the first half of 2023. This financial revitalization translated to a 64.4% rise in adjusted EBITDA from the previous year. The firm credited this progress to the revival of international patronage coupled with domestic tourism demand, highlighting that its renowned Sun City resort and The Table Bay Hotel are substantial benefactors of this growth.

Not to be left behind, City Lodge Hotels reported a robust recovery post-pandemic, with a 55% boost in revenue to R1.7 billion and a striking 452% increase in headline earnings per share. This meant the company transitioned from a loss to a profitable stance; this turnaround was driven by higher foreign tourist numbers alongside domestic business and leisure travel. The company emphasized that its accommodation occupancy rates have not only recuperated but also surpassed the pre-pandemic era, underscoring their strong market adaptability and resilience.

These successes reflect the importance of tourism to South Africa's economy. The multiplier effect from revived tourism influences various sectors, from transportation and hospitality to retail and entertainment, which is pivotal for economic growth and job creation.

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