An Overview Of The Tourism Industry In South Africa

AN OVERVIEW OF THE TOURISM INDUSTRY IN SOUTH AFRICA

By Peter Myles, Director, Tourism Research Unit, Nelson Mandela Metropolitan University

1. INTRODUCTION

In tourism it is almost impossible to say that a product will not be viable or will not work whether it is an accommodation establishment, attraction, facility or service. Travel & tourism is the largest and fastest growing industry in the world. Over 800 million global tourists travel on planet earth every year and only 2 million (0.25%) of these currently come to South Africa. However, a recent global brand awareness survey concluded that about 22 million (3%) of global tourists would visit South Africa if they could get to the country (airline access) and if South Africa could overcome its actual and perceived negative image regarding safety and security.

Therefore tourism growth is not so much a factor of demand but rather more to do with supply i.e. product market fit. To reduce the risk of product failure requires an assessment of demand and supply, identifying target markets followed by a cost effective marketing strategy. This rapid assessment therefore attempts to provide a realistic appraisal of demand and supply, market trends, benchmarks and other performance indicators so that an informed decision can be taken based on a reasonable sample of accommodation establishments using national averages and infrastructure growth as benchmarks.

2. FOREIGN TOURISM IN SOUTH AFRICA, AND TOURIST ACCOMMODATION

A recent analysis of foreign tourism growth to South Africa by the NMMU Tourism Research Unit, confirms that overall foreign arrivals to South Africa was stagnant between 2003 and 2004. This is mainly because foreign tourism growth from within Africa had been stagnating at an average growth rate of 1.5% per annum. Real growth in international arrivals has come in the years when South Africa has hosted world-class events e.g. Rugby World Cup in 1995, WSSD in 2002 and Cricket World Cup in 2003.

However, 9 overseas tourism supply markets to South Africa have been performing well with an average growth rate of just over 8% per annum over the five-year period between 2000 and 2004. In 2004 some countries experienced negative growth when compared with 2003 e.g. Germany, United Kingdom, Netherlands and France. The following markets are ranked in order of volume supply (number of tourists): UK, Germany, USA, Netherlands, France, Nordic Countries, Australia, China and Italy.

After a period of stagnation, global tourism grew from more than 691 million international tourist arrivals in 2003 to 760 million international tourist arrivals in 2004, an increase of 10.0%. In 2005 overall, the number of international tourist arrivals recorded worldwide grew by 5.5% and exceeded 800m for the first time.

According to the data, Africa saw the strongest increase of all the continents, with an estimated growth of 10%. Africa was the only region in the world to have performed much better in 2005 than in 2004. The continent attracted 36.7 million visitors in 2005, 23.1 million visited sub-Saharan nations with the remaining 13.6 million visiting North African states.

South Africa’s tourism industry was expected to grow by 6,5% in 2006, according to the 2006 Tourism Satellite Account (TSA) research done by the World Travel and Tourism Council(WTTC). This should translate into about US$28bn (R170bn) and more than one million jobs. The WTTC research adds that South Africa’s industry is expected to grow by 4.8% per annum between 2007 and 2016. South Africa’s forecasted growth exceeds that of the worldwide expectation of 4.6% for 2006 and 4.2% annual growth between 2007 and 2016. South Africa is currently ranked 37th in absolute size worldwide.

1 2.1 Summary of SA Tourism Growth 2005

According to figures released by Stats SA in 2005, international tourism to South Africa surged to new record levels, with 10.3% more foreigners visiting the country in 2005 than in 2004. Some 7.4 million people from other countries visited SA in 2005, up on the previous year’s figures of 6.7 million. Of this some 7.4 million total foreign arrivals, just under 2.0 million were overseas tourists. It is expected that South Africa will reach the elusive 2 million target for overseas arrivals in 2006 originally set for the year 2000 in the Tourism White Paper.

2.2 Domestic Tourism in South Africa

Growth in domestic tourism is almost impossible to measure accurately because nearly 70% of domestic tourists stay with friends and relatives. Domestic tourism surveys conducted every two or three years differ in the methodology used and some results have been skewed in the past by confusing returning migrant workers with visiting friends and relatives.

The 2003 domestic tourism survey estimated that some 49,400,000 domestic tourism trips were undertaken in South Africa in 2003. Perhaps the most significant measurement was that four provinces in South Africa accounted for 70% of the total number of domestic tourism trips i.e. KZN (28%), Gauteng (17%), Eastern Cape (15%) and Western Cape (11%). However, the surveys do not measure how many domestic tourism trips are made to cities. It is assumed that cities would attract the greatest number of domestic tourism trips because over 50% of South Africa’s population live in cities.

2.3 South Africa voted Sixth Best Destination

South Africa has been ranked number six in the top 10 world travel destinations in 2005, breaking into the top 10 for the first time ever, as determined by an annual survey by iExplore, a US-based online seller of adventure and experiential travel. South Africa moved up seven spots from 13 in 2004, beating such popular countries as France, Italy and New Zealand.

South Africa is seen as one of the most diverse and enchanting countries in the world. As a holiday destination it has it all – an exotic combination of landscapes, people, history, wildlife and culture – making it increasingly popular.

There are several factors that have enabled South Africa to do so well, while the global tourist industry has experienced incredibly tough times. First, South Africa is seen as being remote from the terrorism, SARS and avian flu that have affected many other countries. It has built an image as a safe holiday destination, with government and industry leaders acting quickly to counterbalance reports of car-jackings and visitor muggings with initiatives to ensure travellers’ safety.

Second, despite the continuing strength of the Rand, South Africa still represents good value for money. American Express, in fact, ranked SA as the world’s second most affordable destination in 2005. Third, South Africa has impressive tourism assets, including world-class beaches that enjoy year-round sunshine. Its vibrant and culturally diverse cities provide excellent shopping and dining.

2.4 Summary of SA Tourism Growth 2006

Results recently released by SA Tourism confirm that 2006 was an all-time record breaking year for tourism in South Africa. The 13.9% increase in foreign tourist arrivals to South Africa far exceeded the global growth rate of 4.5% in 2006. This was more than three times higher than the global rate. Some 8.4 million foreign tourists visited South Africa in 2006 of which 2.09 million were overseas tourists. This is 1,027,091 more foreign tourists arriving in South Africa than in 2005. Only two provinces increased the average length of stay in 2006 i.e. Western Cape and Eastern Cape.

2 2.5 SA Tourism Growth Overseas Arrivals 1994 – 2006

YEAR ARRIVALS % GROWTH 1994 704 585 13,9% 1995 1 071 660 52,1% *Rugby World Cup 1996 1 172 394 9,4% 1997 1 273 936 8,7% 1998 1 428 401 12,1% 1999 1 491 059 4,4% 2000 1 531 720 2,7% 2001 1 558 498 1,8% 2002 1 803 887 20,1% * World Summit (WSSD) 2003 1 879 110 4,0% * Cricket World Cup 2004 1 884 336 0,3% 2005 1 939 214 3,0% 2006 2 095 472 8,0%

Commentary:

The impact of hosting world class events is clearly indicated in the above table. This signals an early warning alarm and incredible opportunity for tourism growth when South Africa hosts the FIFA World Cup in 2010.

2.6 Foreign Tourism Growth To South Africa 2001 – 2005

FOREIGN ARRIVALS TO SOUTH AFRICA CUMULATIVE GROWTH 2001 - 2005 Country of 2001 2002 2003 2004 2005 Growth Residence % United Kingdom 356,759 442,910 456,468 456,368 469,599 32% Germany 203,911 248,990 257,018 245,452 249,504 22% USA 170,611 182,591 187,447 208,159 233,417 37% Netherlands 96,090 110,389 120,933 120,838 116,244 21% France 82,745 112,078 127,760 109,276 101,139 22% Nordic Countries 48,719 61,786 73,405 78,294 84,557 74% Australia 60,684 69,832 71,687 75,675 77,238 27% Italy 36,899 47,756 49,818 50,429 51,464 39% Total top - 8 1,049,200 1,265,533 1,337,540 1,345,142 1,375,926 31% South America 43,979 38,311 40,357 45,296 47,818 9% China 29,681 36,957 42,822 51,080 44,228 49% Switzerland 32,481 36,977 35,640 36,786 39,069 20% Belgium 34,453 39,242 42,735 37,277 38,502 12% India 28,012 34,062 41,018 36,172 36,045 29% Middle East 29,833 33,401 31,814 31,653 33,551 12% Japan 24,598 26,239 21,311 23,091 27,284 11% New Zealand 13,391 14,907 16,387 16,348 17,825 33% Total next - 8 243,646 270,895 279,080 277,052 258,513 6% Rest of Overseas 209,244 267,459 262,490 262,142 304,775 46% Total Overseas 1,502,090 1,803,887 1,879,110 1,884,336 1,939,214 29% Africa by Air 281,338 311,918 285,008 311,019 376,157 34% Africa by Land 3,852,803 4,144,053 4,168,242 4,331,052 4,997,510 30% Total Africa 4,134,141 4,455,971 4,453,250 4,642,071 5,373,667 30% Unspecified 151,337 169,725 172,530 151,453 55,861 - 63% Grand Total 5,787,568 6,429,583 6,504,890 6,677,860 7,368,742 27% (Source: Table compiled by the NMMU Tourism Research Unit from SA Tourism Annual Reports)

3 Commentary:

 There are reportedly 63-million Chinese overseas travellers. China moved up from 15th place in 2000 to the eighth most important overseas tourism supply market to South Africa in 2004. However, China has dropped to 10th place in 2005 mainly as a result of perceptions of South Africa as being a dangerous place to visit.  The Nordic Countries collectively comprise Denmark, Finland, Norway and Sweden. These countries especially Sweden have indicated the greatest growth trend with an average growth of 15% per annum in the five years between 2001 and 2005.  Italy has moved up from 9th to 8th place.  Just over 6% of foreign tourists from Africa arrive by air transport and the rest arrive by road (mainly cross border). After stagnating at a growth rate of about 1.5% per annum compared to the top ten overseas tourism markets, Africa has picked up and is now averaging 6% per annum growth rate. The FIFA World Cup is expected to stimulate foreign tourism growth from Africa.

2.7 Foreign Tourists Spend Per Day In Sa By Purpose Of Visit

Year All Foreign Holiday Business VFR Tourists Other Tourists Tourists Tourists Tourists 2004 R1,400 R860 R2,636 R629 R1,038 2005 R1,472 R861 R1,151 R579 R 788 (Compiled by NMMU Tourism Research Unit from SA Annual Tourism Reports)

2.8 Foreign Tourists Spend Per Day In South Africa By Category

FOREIGN TOURISTS SPEND PER DAY IN SA BY CATEGORY

2003 % 2004 % 2005 % Accommodation R3,112 24% R3,132 21% R3,537 25% Transport R1,501 11% R1,569 11% R1,650 12% Food & Beverage R1,540 12% R1,407 10% R1,503 11% Leisure & Entertainment R1,520 12% R1,446 10% R1,379 10% Medical R1,149 9% R3,551 24% R2,576 18% Shopping R4,180 32% R3,458 24% R3,458 24%

TOTAL R13,002 100% R14,563 100% R14,103 100% (Compiled by NMMU Tourism Research Unit from SA Annual Tourism Reports)

4 2.9 Activities Undertaken by Foreign Tourists in South Africa 2003 - 2005

Activities 2003 2004 2005 Shopping 82% 88% 87% Nightlife 49% 55% 63% Social 39% 46% 45% Visiting natural attractions 23% 25% 26% Cultural, historical & heritage 18% 22% 26% Beach 23% 25% 26% Wildlife 22% 25% 24% Business 13% 13% 13% Theme Parks 9% 11% 11% Visited a Casino 13% 12% 10% Trading 8% 10% 9% Adventure 8% 7% 7% Sporting 6% 6% 6% Medical 6% 5% 5% Health 2% 2% 2% (Source: SA Annual Tourism Reports 2003, 2004 and 2005)

The above figures do not add up to 100% because tourists participate in more than one activity.

2.10 Provincial Distribution of Foreign Tourists % Visitors and Bed Nights

PROVINCIAL DISTRIBUTION OF FOREIGN TOURISTS % VISITORS Province 2003 2004 2005 Gauteng 50.7% 50.8% 49.4% KwaZulu Natal 18.6% 20.4% 21.7% Western Cape 23.5% 22.9% 21.6% Mpumalanga 16.3% 15.3% 14.9% Free State 11.8% 10.1% 8.7% North West 11.5% 9.5% 8.0% Eastern Cape 7.7% 7.8% 7.6% Limpopo 6.0% 5.7% 7.0% Northern Cape 2.7% 2.6% 2.6% (Compiled by NMMU Tourism Research Unit from SA Annual Tourism Report 2005)

PROVINCIAL DISTRIBUTION OF FOREIGN TOURISTS % BEDNIGHTS Province 2003 2004 2005 Gauteng 31% 31% 31% Western Cape 26% 28% 28% KwaZulu Natal 15% 15% 16% Mpumalanga 7% 7% 7% Eastern Cape 6% 6% 6% Free State 7% 5% 4% Limpopo 3% 3% 4% North West 4% 3% 3% Northern Cape 1% 1% 1% (Compiled by NMMU Tourism Research Unit from SA Annual Tourism Report 2005)

Commentary:

 The comparative tables above indicate the percentage of foreign tourists visiting each province in South Africa and the percentage of bed nights spent in each province

5  The above tables indicate that nearly 8% of all foreign tourists to South Africa visit the Eastern Cape but only 6% spend at least one night in the province. This means that 2% leak out e.g. they are either dropped off at Port Elizabeth or East London airports for departures to other provinces or to O.R. Tambo International Airport before leaving South Africa but they do not spend a single night in the province

2.11 Accommodation Growth in South Africa 1996 and 2004

Accommodation Beds 2004 Beds 1996 % growth, 2004 over 1996 Hotels 120 000 85 000 41% Resort & Self-catering 194 000 75 000 159% Guest Houses & Guest Farms 46 200 30 000 54% Bed & Breakfast 26 000 8 000 325% Game & Hunting Lodges 25 200 24 000 5% Timeshare 24 400 22 000 11% Executive Apartments 5 000 3 000 67%

TOTAL 440 800 247 000 79% (Source: Grant Thornton 2004)

Commentary:

Unfortunately a more recent survey has not been undertaken but the above table clearly indicates national growth in the accommodation sector.

6 STATISTICS SOUTH AFRICA TOURIST ACCOMMODATION STATISTICS FROM DECEMBER 2005 TO DECEMBER 2006 P6410

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006

Hotels Occupancy rate 61,0% 59,3% 72,8% 70,3% 63,5% 62,8% 60,8% 61,6% 65,6% 73,9% 71,8% 77,0% 63,0% Average income R554 R579 R573 R555 R519 R514 R528 R526 R501 R537 R571 R636 R640

Caravan Parks & Camping sites Occupancy rate 37,8% 18,5% 12,0% 15,8% 21,7% 9,8% 10,0% 11,9% 15,4% 14,7% 11,6% 16,1% 34,4% Average income R281 R197 R215 R239 R172 R254 R214 R225 R165 R238 R257 R233 R288

Guest Houses & Guest Farms Occupancy rate 44% 39% 47% 49% 47% 35% 34% 40% 48% 50% 50% 53% 59% Average income R537 R542 R541 R450 R451 R390 R420 R439 R461 R441 R472 R527 R586

Other Accommodation Occupancy rate 37,4% 35,5% 39,0% 39,8% 42,7% 35,5% 34,4% 38,6% 38,0% 40,9% 39,3% 39,5% 46,4% Average income R370 R374 R305 R312 R321 R291 R283 R278 R295 R317 R322 R380 R399 (Comparative tables compiled by the NMMU Tourism Research Unit)

Commentary:

 Stay unit refers to the unit of accommodation that is available to be charged out to guests e.g. a powered site in a caravan park or a room in a hotel  There are no published releases for the provinces. Provinces will have to collect there own accommodation statistics  Average income is the average income per stay unit nights sold e.g. hotel room nights sold

7 2.12 Accommodation Usage Foreign Tourists to South Africa Bed Nights 2003, 2004, 2005

Establishment 2003 2004 2005 Hotels 14,683,912 13,534,840 13,332,598 Guest Houses 3,903,069 3,919,362 3,872,463 Bed & Breakfasts 3,167,420 3,164,880 3,673,093 Game Lodges 2,905,801 2,804,163 2,562,387 Self-catering units 4,336,750 3,951,303 5,793,860 Backpacking Hostels 3,321,407 3,007,731 3,194,332 Camping & Caravan Parks 1,237,627 1,183,786 1,015,201 Trains/Ships 3,521,699 1,059,860 128,651 TOTAL 37,077,685 32,625,925 33,572,585 (Source: SA Annual Tourism Reports 2003, 2004 and 2005)

Commentary:

The table above indicates recent growth in the demand for self-catering units by foreign tourists and it is assumed that these are mainly independent travellers. Group tours usually purchase an inclusive package of which pre-booked hotel accommodation is included in the package. Results for 2006 have not yet been released.

2.13 Foreign Tourism Accommodation Usage (bed nights) Per Quarter South Africa 2005 and 2006 Establishments Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2005 2006 2005 2006 2005 2006 2005 2006 VFR 6,600,062 7,568,648 5,381,807 6,408,553 5,603,726 6,114,40 4 Hotels 3,474,156 4,255,856 2,843,103 2,751,091 2,999,938 3,144,95 4 Guest Houses 921,565 1,445,585 806,264 1,010,753 1,003,595 762,106 Game Lodges 552,310 680,503 528,625 709,396 707,884 836,068 Self-catering units 1,084,325 1,326,821 1,386,391 1,807,610 1,533,324 1,783,71 0 Bed & Breakfasts 929,318 1,015,983 726,113 642,599 853,305 760,125 Other establishments 911,003 779,627 548,750 1,099,573 373,735 608,337 Backpacking hostels 963,641 569,997 535,233 559,979 851,932 577,859 Camping & caravan 224,072 256,528 252,970 252,276 292,000 182,991 parks Hospitals 75,934 172,613 136,706 82,985 86,185 130,431 Train/ship 28,303 17,877 17,289 25,480 32,520 14,285

Commentary:

The table above indicates the seasonality of accommodation used by foreign tourists visiting South Africa. The comparative results for Q4 have not been released yet but there is an indication of year round usage which matches the profile of independent travellers.

2.14 Type Of Package Used By Foreign Tourists To SA 2004

 Fully inclusive package is where airfare, accommodation, coach tours and food are all included  Full package is where airfare, accommodation and food is included  Package is where airfare and accommodation is included  Independent travellers book airfare, accommodation, coach tours and food separately

8 Country Fully inclusive Full package Package Independent package Africa & Middle East Angola 9.8% 1.0% 1.3% 87.8% Botswana 23.4% 1.8% 5.6% 69.2% Kenya 26.3% 2.7% 2.5% 68.5% Lesotho 25.6% 5.3% 1.7% 67.4% Malawi 13.4% 4.9% 1.7% 79.9% Mozambique 7.1% 5.2% 3.2% 84.5% Namibia 13.2% 5.6% 1.5% 79.7% Nigeria 19.7% 2.8% 2.5% 75.0% Swaziland 27.8% 2.5% 1.7% 67.9% Tanzania 12.0% 3.3% 4.3% 80.4% Zambia 10.8% 3.2% 3.4% 82.6% Zimbabwe 12.8% 5.4% 1.6% 80.1% Other Africa & Middle East 18.6% 4.8% 4.6% 72.1%

Americas Brazil 27.9% 5.4% 4.4% 62.3% Canada 27.1% 2.7% 2.6% 67.7% USA 28.9% 4.2% 2.5% 64.4% Other Americas 34.3% 4.7% 5.1% 55.8%

Asia & Australasia Australia 17.8% 3.8% 2.2% 76.2% China (inc Hong Kong) 38.2% 9.1% 5.4% 47.3% India 23.0% 4.8% 1.3% 71.0% Japan 37.2% 7.3% 6.5% 49.0%

Europe France 44.9% 4.4% 3.0% 47.7% Germany 27.9% 4.9% 3.3% 63.9% Italy 39.0% 6.3% 7.5% 47.3% Netherlands 28.3% 3.4% 5.2% 63.1% Sweden 23.5% 3.4% 5.5% 67.7% United Kingdom 22.1% 3.8% 2.6% 71.5% Other Europe 25.7% 4.6% 3.4% 66.2%

ALL FOREIGN TOURIST 25.2% 4.4% 3.3% 67.1%

From the above it is evident that the majority of foreign tourists to South Africa are independent travelers. This means that either South Africa is mainly attracting the independent travel market or that South African package tours are not competitive. Competitiveness is a function of price related to value and product differentiation. There have been complaints from overseas tour operators that South Africa is offering too many of the same products i.e. not enough variety. It is worth noting that China, Japan, Italy and France are the exceptions.

9 2.15 Guesthouse Accommodation In South Africa

2.15.1 Guesthouse Definition: (Tourism Grading Council of South Africa)

A guesthouse is either defined as a converted house, manor, etc adapted to accommodate overnight guests or it may be a purpose built facility. A guesthouse is run as a commercial operation and is often owner-managed. A guesthouse has public areas that are for the exclusive use of the guest. The owner/manager either lives off-site, or in a separate area within the property. A further definition is that guesthouses must offer three meals a day as opposed to only bed and breakfast.

STATS SA TOURIST ACCOMMODATION GUEST HOUSES 2005 Guest-houses and guest-farms 12 months 2005

Average stay units available 10 817 Total stay unit nights sold 1 839 800 Average occupancy rate (%) 37,9% Average income per stay unit nights sold (Rand) R330.18 Income from accommodation (R million) R610.5m (70%) Income from restaurant and bar sales (R million) R183.5m (21%) Other income (R million) R 75.0m (9%) Total income (R million) R869.4m (100%)

Stats SA (Sample of 1 300 enterprises from a population of about 5 500)

Note: Stay unit refers to the unit of accommodation that is available to be charged out to guests, for example, a powered site in a caravan park or a room in a hotel.

Average income per stay unit night sold refers to average rate per stay unit i.e. rate per room in a hotel or powered site in a caravan site. The total income from accommodation divided by the number of stay units sold in a survey period multiplied by 1000.

Stay unit nights sold refers to the total number of stay units occupied on each night during the survey period.

In 2005, according to the above information, it is estimated that an average of 10 817 rooms were available in guesthouses, a total of 1.84 million room nights were sold, the average room night sold was R330.18, the average room occupancy rate was 38% and the total income generated by guesthouse accommodation was R611 million. Accommodation accounted for 70% of turnover.

Combining guest farm accommodation with guesthouse accommodation probably pulled down the average rate of a room night sold in guesthouses and also the average room occupancy rate. Therefore to benchmark the different rates offered in guesthouse accommodation, a sample has been taken of those guesthouses in the Eastern Cape included in the AA Accommodation Guide and the Portfolio Bed and Breakfast Collection. The accommodation guides compiled by these two cooperative marketing organisations will identify all the facilities offered by the listed advertisers.

The table below is an estimate of accommodation available in South Africa according to surveys undertaken by Grant Thornton in 1996 and 2004. According to these surveys, the number of guesthouses in South Africa increased by 35% between 1996 and 2004 i.e. an average growth rate of about 4% per annum. However, it is not possible to measure how many guesthouses closed down during this period because there is no national database of guesthouse accommodation.

10 A COMPARISON OF ACCOMMODATION GROWTH IN SA Accommodation Beds 2004 Beds 1996

Hotels 120 000 85 000 Resort & Self-catering 194 000 75 000 Guest Houses & Guest Farms 46 200 30 000 Bed & Breakfast 26 000 8 000 Game & Hunting Lodges 25 200 24 000 Timeshare 24 400 22 000 Executive Apartments 5 000 3 000

TOTAL 440 800 247 000 (Source: Grant Thornton surveys 1996 and 2004)

2.15.2 East Cape Guesthouses advertised AA Accommodation Guide 2005

There are only a few guesthouses in the Eastern Cape that are listed in the 2005 AA Accommodation Guide. These include:

Name of Guesthouse No of Rooms Average Rate Place

The Thatch Guesthouse 5 rooms R300 – R400 per person East London Devereux Lodge 12 rooms R300 – R400 per room East London Quarry Lake Inn 16 rooms R300 – R400 per person East London Hazeldene Guesthouse 5 rooms R400 – R500 per room Port Elizabeth Sir Roy’s Guesthouse 10 rooms R300 – R400 per person Port Elizabeth

Commentary:

Accommodation offered at Quarry Lake Inn in East London provides a benchmark. The bill for a one night stay in a double room amounted to R588.00 i.e. Accommodation R560.00, Drinks/Beverages R28.00. Vat included @14.00% = R72.21

Establishments that advertise in acknowledged accommodation guides provide a good benchmark because they have to conform to a national standard. However, even if the standard is not a grading or accreditation certificate awarded by the Tourism Grading Council of South Africa it can still be based on reputation e.g. AA Accommodation Guide has established its own standard of excellence.

2.15.3 Eastern Cape Guesthouses advertised in the Portfolio Bed & Breakfast Collection 2006

Name of Guesthouse No of Rooms Average Rate Place

Admiralty Beach House 5 rooms + 2 R325 – R450 per person Port Elizabeth Anchorage Guest House 5 rooms R295 + per person Port Elizabeth Carslogie House 4 rooms R275 + per person Port Elizabeth Kingfisher Guest House 6 rooms R250 + per person Port Elizabeth Lange’s Guest House 6 rooms R220 – R340 per person Port Elizabeth Tiran Guest House 5 rooms + 2 R350 per room Port Elizabeth Conifer Beach House 4 rooms + 1 R220 – R300 per person Port Elizabeth

All of the above would be categorised as guesthouses because they offer the option of other meals. If the establishment only offers breakfast then by definition it is a bed & breakfast regardless of whether it is luxury accommodation or not.

11 2.15.4 Port Elizabeth 5-Star Accommodation Establishments

Name of Establishment Rooms Beds Rate

Lemon Tree Lane B&B 6 13 From R295 pp Admiralty Beach House 7 19 R350 – R550 pp Anchorage Guest House 5 14 From R350 pp Hacklewood Hill Country House 8 16 R500 – R1320 pp King’s Tide Boutique Hotel 10 20 R295 – R658 pp The Windermere Hotel 8 16 R690 – R1265 pp

Grading:

Lemon Tree Lane TGCSA 5-Star Bed & Breakfast Admiralty Beach House TGCSA 5-Star Guest House Anchorage Guest House TGCSA 5-Star Bed & Breakfast Hacklewood Hill Country House TGCSA 5-Star Hotel The Windermere Hotel TGCSA 5-Star Hotel

Commentary:

With reference to the TGCSA grading system it would appear from the above that the difference between a 5-Star Guest House, Boutique Hotel, Country House and Small Hotel is marginal. The Anchorage Guest House is in fact graded as a B&B and Hacklewood Hill Country House is graded as a 5-Star Hotel. The Windermere Hotel would appear to be a Boutique Hotel and yet is graded as a 5-Star Hotel. King’s Tide Boutique Hotel does not appear to be graded.

12 3. EASTERN CAPE TOURISM: BENCHMARKS AND TRENDS

SA TOURISM QUARTERLY REPORTS 2004 - 2006 EASTERN CAPE PROVINCIAL DISTRIBUTION

Quarters Provincial Provincial Distribution Distribution (Visitors) (Bed Nights)

Q1 2004 9.0% 917,681 Q2 2004 6.3% 784,864 Q3 2004 5.9% 816,563 Q4 2004 8.9% 950,072 TOTAL 3,469,180

Q1 2005 7.8% 948,778 Q2 2005 5.7% 754,971 Q3 2005 7.3% 833,718 Q4 2005 9.2% 1,238,363 TOTAL 3,775,830

Q1 2006 9.0% 1,233,708 Q2 2006 5.0% 953,195 Q3 2006 5.1% 856,998 Q4 2006 TOTAL (Comparative tables compiled by the NMMU Tourism Research Unit)

Commentary:

 Once again there has been a change in the system of reporting. The 2005 and 2006 SA Provincial Quarterly Reports only provide information on provincial distribution according to the percentage share of visitors attracted to each province and the number of bed nights spent by foreign tourists in each province  According to the above figures, there was an increase of 9% in bed nights spent in the Eastern Cape when comparing 2005 with 2004  It would appear from the above figures that to date 506,434 more bed nights have been spent in the Eastern Cape when comparing the first three quarters of 2006 with 2005. This is an increase of 20% over the previous year.  On average the Eastern Cape remains the 7th most popular destination for foreign tourists and Q1 and Q4 remain the most popular quarters for foreign visitors (November to March)  It is assumed that Nelson Mandela Bay (NMB) would follow a similar trend to the above Eastern Cape tourism growth statistics because previous SA Tourism Quarterly Reports have indicated that nearly 80% of all foreign tourists who visit the Eastern Cape visit NMB

13 PROVINCIAL DISTRIBUTION – VISITORS EASTERN CAPE 2005 2004 Africa & Middle East 3% 2.3%

Lesotho 3% 2.6% Malawi 10% 4.7% Mozambique 7% 0.4% Nigeria 7% 2.4% Zambia 13% 4.2% Zimbabwe 3% 6.0% Other Africa & Middle East 7% 5.0%

Americas 16% 15.3%

Brazil 13% 5.8% Canada 19% 20.4% USA 16% 15.0% Other Americas 16% 18.1%

Asia & Australasia 10% 10.5%

Australia 15% 16.7% China 6% 7.5% India 7% 7.1% Other Asia & Australasia 11% 9.6%

Europe 24% 25.7%

France 23% 21.4% Germany 29% 33.3% Italy 24% 32.4% Netherlands 27% 28.0% Sweden 35% 34.8% United Kingdom 20% 22.6% Other Europe 22% 22.2%

All Foreign Tourists 8% 7.8% (Analysis of SA Tourism Reports by NMMU Tourism Research Unit)

Commentary:

The figures in the above table do not represent market share but rather tourism growth from source markets e.g. the UK is the biggest supplier of foreign tourists to South Africa but only 20% of the foreign arrivals from the UK visit the Eastern Cape. Likewise Sweden is not the biggest source market to the Eastern Cape in numbers but of all the Swedish foreign arrivals to South Africa some 35% visit the Eastern Cape which is an indication that the province is popular with Swedish tourists.

14 4. ANALYSIS OF DOMESTIC TOURISM IN SOUTH AFRICA

4.1 A Cautionary Tale

In 2005, a methodological error was found in the calculation of the value of the domestic tourism market. The 2003 domestic tourism report has been revised with the correct data. Quarterly domestic tourism reports were introduced in 2005 to measure and track the domestic tourism market. The report provides information on the number of domestic tourism trips, the value of the domestic market and other behavioural information on domestic tourist patterns.

Growth in domestic tourism is almost impossible to measure accurately because nearly 70% of domestic tourists stay with friends and relatives. Domestic tourism surveys conducted every two or three years differ in the methodology used and some results have been skewed in the past by confusing returning migrant workers with visiting friends and relatives.

The latest survey conducted in 2003 is perhaps one of the more reliable surveys ever undertaken even though there was a margin of error in the value calculation. According to this survey some 49,400,000 domestic tourism trips were undertaken in South Africa during 2003. Perhaps the most significant measurement was that four provinces in South Africa accounted for 70% of the total number of domestic tourism trips i.e. KZN (28%), Gauteng (17%), Eastern Cape (15%) and Western Cape (11%).

The surveys do not measure how many domestic tourism trips are made to cities. It is assumed that cities would attract the greatest number of domestic tourism trips because over 50% of South Africa’s population live in cities.

4.2 Domestic Tourism Surveys not Comparable

The first domestic tourism survey in South Africa was undertaken in 1992, thereafter in 1994, 1997 and 2001. Additionally, Tourism Kwazulu-Natal undertook a survey of the urban domestic tourism market in 1997/1998. It is very difficult to find a correlation or travel pattern when comparing these surveys. The 2001 domestic tourism survey is by far the largest of its type ever taken in South Africa.

A national sample of 10,000 respondents was selected across the country, stratified by province and lifestyle category. According to the survey, 59% of domestic tourism trips were made by visiting friends and relatives (VFR). When one considers the population distribution in the cities and towns of the Eastern Cape, then one cannot help wonder if this category was not skewed by including returning migrant workers i.e. returning residents.

4.3 Provincial Distribution of Domestic Tourism 2001

Provincial Distribution of Domestic Tourism Trips 2001 Province Number of trips Percentage Value of trips Gauteng 6,579,421 19,6% R 3 248m Kwazulu-Natal 6,378,010 19,0% R 3 148m Limpopo 4,330,333 12,9% R 2 137m Eastern Cape 4,296,765 12,8% R 2 121m Western Cape 4,196,059 12,5% R 2 071m North West 2,651,910 7,9% R 1 309m Free State 2,249,088 6,7% R 1 110m Mpumalanga 1,913,403 5,7% R 944m Northern Cape 906,348 2,7% R 447m TOTAL 33,501,538 100,0% R16 569m (Source: SA Domestic Tourism Survey 2001)

15 The above table confirms that the Eastern Cape is the third most popular holiday destination for domestic tourists in South Africa (Although the percentage market share of the Eastern Cape, Western Cape and Limpopo provinces are virtually the same this does not correlate with previous surveys). The annual summer holiday at the coast is still the most popular attraction for most South Africans. There are only three provinces in South Africa with a coastline and hence it is unlikely that the Eastern Cape would be fourth.

Domestic Trips in South Africa May 2000 – April 2001 Number Holiday, Visits to Business or Trips for Trips for Total trips of trips leisure & friends & professional health religious recreation relatives trips treatment reasons One 2,956,163 6,527,860 418,991 617,487 2,304,810 12,825,311 Two 1,487,840 4,841,082 215,522 147,678 1,177,044 7,869,166 Three 1,188,174 2,553,576 138,639 45,363 402,840 4,328,592 Four 478,024 1,484,252 66,632 308,004 2,336,912 Five 235,385 685,630 61,215 541,455 1,523,685 Six 540,012 3,518,528 559,332 4,617,872

TOTAL 6,885,599 19,610,928 1,460,331 810,528 4,734,153 33,501,538

% 21% 59% 4% 2% 14% 100%

R Value R9 753m R4 520m R894m R298m R1 104m R16 569m (Source: Domestic Tourism Survey 2001)

4.4 Eastern Cape Domestic Tourism Regions 2001

The Eastern Cape has been divided into six tourism regions for the purpose of the domestic tourism survey. The six regions are:

1. Wild Coast (Umtata, Butterworth, Port St Johns, Queenstown, Coffee Bay)

2. Friendly N6 (Aliwal North, Burgersdorp, Lady Frere)

3. Amatola (Fort Beaufort, King William’s Town, Bisho)

4. Sunshine Coast & Country (Port Alfred, Port Elizabeth, East London)

5. Karoo Heartland (Graaff-Reinet, Aberdeen, Jansenville)

6. Tsitsikamma (Tsitsikamma National Park)

Types of trips to Eastern Cape destinations by tourism region 2001 Tourism Region Number Leisure VFR Business Health Religious of Trips Wild Coast-Tkei-Ciskei 1,847,609 369,522 1,274,850 18,476 36,952 147,809 Friendly N6 945,288 217,416 604,984 28,359 - 94,529 Amatola 300,774 51,132 192,495 3,008 - 54,139 Sunshine Coast & Country 945,288 349,757 482,097 28,359 9,452 75,623 Karoo Heartland 214,838 49,413 124,606 2,148 2,149 36,522 Tsitsikamma 42,968 36,952 6,016 - - - TOTAL 4,296,765 1,074,192 2,685,048 80,350 48,553 408,622 (Source: Domestic Tourism Survey 2001)

16 Sources of Information % Users - Domestic Tourism Survey 2001 Information Types East West North KZN Gaut Mpum Free North Limp Cape Cape Cape State West Family & Friends 79,9% 58,2% 65,3% 60,1% 64,5% 66,1% 63,4% 65,5% 72,4% Radio 19,8% 14,3% 23,2% 18,0% 21,7% 19,6% 23,0% 24,5% 18,7% Television 10,3% 16,5% 17,3% 18,2% 18,6% 13,1% 15,1% 17,9% 10,2% Magazines 6,2% 16,4% 16,1% 11,7% 12,6% 8,5% 9,8% 9,6% 6,9% Newspapers 9,5% 15,6% 16,7% 14,6% 16,5% 11,6% 9,6% 12,0% 9,3% Brochures 5,1% 21,7% 15,2% 12,5% 9,0% 6,3% 8,8% 5,2% 3,3% TIC’s (Bureaus) 3,2% 18,3% 15,1% 7,4% 5,5% 3,2% 5,4% 3,0% 2,0% Colleagues 3,8% 6,0% 5,1% 5,6% 5,4% 6,4% 4,2% 4,4% 4,0% Tourist Books 3,1% 9,5% 7,8% 4,5% 3,7% 2,9% 4,2% 2,0% 1,5% Internet 2,8% 8,5% 5,7% 5,4% 3,9% 3,7% 3,2% 2,7% 1,5% (Source: Domestic Tourism Survey 2001)

The above table illustrates the importance of the visiting friends and relatives market (VFRs) and also the power of personal recommendation.

4.5 Analysis Of Activities Undertaken By Domestic Tourists 2005

Activity Q1 Q2 Q3 Q4 Social 33.2% 49.9% 50.6% 63.2% Shopping 17.7% 13.3% 15.9% 20.7% None 15.9% 13.2% 9.5% - Beach 7.7% 4.2% 3.8% 7.1% Nightlife 7.2% 6.0% 6.6% 8.3% Casino 4.0% 1.6% 1.4% 1.7% Business 2.2% 4.0% 2.6% 3.6% Natural 2.1% - 1.6% 3.4% Wildlife 2.1% - - 2.7% Sporting 2.0% 1.4% - 0.8%

4.6 Analysis Of Provincial Distribution Domestic Tourism 2005

Province Q1 Q2 Q3 Q4 KwaZulu Natal 26.1% 12.1% 30.7% 29.3% Gauteng 16.6% 7.8% 19.6% 18.9% Eastern Cape 13.8% 3.6% 5.6% 9.8% Western Cape 12.2% 3.1% 7.3% 7.4% Limpopo 10.0% 1.2% 10.3% 9.5% Mpumalanga 9.1% 0.8% 3.1% 5.0% North West 7.4% 3.4% 11.0% 11.8% Free State 3.6% O.9% 7.8% 7.0% Northern Cape 1.8% 0.7% 3.6% 1.2% (Source: SA Tourism Provincial Quarterly Reports 2005)

Commentary:

The above table clearly indicates the seasonality of domestic tourism and the impact of long-haul and short-haul domestic tourism. The methodology and system for measuring domestic tourism has changed in 2006 and will probably change again when the results of the 2007 Domestic Tourism Survey is released.

17 KwaZulu Natal is South Africa’s leading domestic tourism destination mainly because of its proximity to the main Gauteng domestic tourism supply market and its warmer all year round climate. KZN has been very successful with its off-season marketing campaigns.

It is generally accepted based on an analysis of previous domestic tourism surveys that the Eastern Cape is the third most popular domestic tourism destination in South Africa. This is influenced by the number of long-haul domestic tourists from Gauteng who select the province mainly for beach tourism. However, many former Eastern Cape residents live in Gauteng for business and employment reasons and they return mainly in summer to visit their friends and relatives.

18 5. ACCOMMODATION SUMMARY FOR NELSON MANDELA BAY AND SURROUNDS

5.1 Summary Of Accommodation As At August 8, 2006:

Formal Accommodation:

Location Facilities Rooms Beds Nelson Mandela Bay 263 3,752 9,861 150Km Radius 374 2,855 8,553 1 Hour Flight 164 3,126 6,663 TOTAL 801 9,733 25,077

Total Beds Required: 27,200 * As per NMMM - Stadium 2010 Business Plan Total Beds Outstanding: 2,123 (Source: Nelson Mandela Bay Tourism)

5.2 Accommodation Types in NMB:

Type Facilities Rooms Beds Hotel 29 1688 3923 Self-Catering 52 476 1563 B&B 74 466 1028 Guest Houses 67 444 991 Resorts 8 269 950 Camping & Caravanning 6 150 631 Lodges 13 122 376 Backpackers 8 99 255 Cottage 4 21 87 Guest Farm 2 12 37 Leasing 2 5 20 TOTAL 265 3,752 9,861 (Source: Nelson Mandela Bay Tourism)

Commentary:

In preparation for the FIFA World Cup in 2010, the local destination marketing organisation, Nelson Mandela Bay Tourism (NMBT), conducted a comprehensive survey of all the accommodation establishments in and around Nelson Mandela Bay.

This survey is therefore the best source if information available for anyone contemplating an investment in accommodation. The information does not cover any establishments that may have closed down but these are generally far and few between. Very often it is not so much a case of closing down but of change in ownership when the original owners either leave town or speculate and sell according to property demand.

5.3 Accommodation in NMB grouped by Grading Grading ***** Sub Category Rooms Beds Facilities Hotel 66 132 4 Lodges 21 84 1 Guest Houses 12 33 2 B&B 6 13 1

19 TOTAL 105 262 8 Grading **** Sub Category Rooms Beds Facilities Hotel 536 1037 6 Guest Houses 23 54 3 Self-Catering 4 16 1 B&B 5 12 1 TOTAL 568 1119 11 Grading *** Sub Category Rooms Beds Facilities Hotel 747 1963 9 Resorts 80 290 1 Self-Catering 81 264 4 Guest Houses 69 148 11 Lodges 39 125 3 B&B 48 109 6 TOTAL 1064 2899 34 Grading ** Sub Category Rooms Beds Facilities Hotel 112 323 2 B&B 13 26 2 TOTAL 125 349 4 Grading None Sub Category Rooms Beds Facilities Self-Catering 391 1283 46 B&B 394 868 63 Guest Houses 340 756 51 Resorts 189 660 7 Camping & 150 631 6 Hotel 227 468 8 Backpackers 99 255 8 Lodges 62 167 9 Cottage 21 87 4 Guest Farm 12 37 2 Leasing 5 20 2 TOTAL 1890 5232 206 GRAND TOTAL 3752 9861 263 5.4 Accommodation In NMB, Surrounding Towns And 1 Hour Flight Per Town

Distance Location Town from PE Rooms Beds Facilities Coega 31 50 100 1 Nelson Mandela Port Elizabeth 0 3550 9332 245 Bay Uitenhage 40 152 429 17 150Km Radius Addo 61 430 1071 36 Alexandria 114 28 60 6 Alicedale 106 61 124 3 Bathurst 142 46 106 8 Baviaanskloof 80 123 399 26 Bushmansrivermouth 137 2 4 1 Cannon Rocks 132 0 0 1 Cannonville 47 9 20 2 Colchester 46 180 837 5 Grahamstown 130 604 1334 118 Hankey 76 3 8 1 20 Humansdorp 86 29 60 11 Jeffreys Bay 76 640 2595 70 Kenton on Sea 138 103 337 15 Kirkwood 83 29 56 3 Lalibela 90 23 46 1 Middleton 120 12 28 1 Nanaga 114 6 15 2 Patensie 76 78 292 17 Paterson 80 131 269 8 St Francis Bay 107 313 880 38 Wolwefontein 120 5 12 1 East London 287 2693 5535 152 George 326 118 236 2 Knysna 265 142 564 6 1Hr Flight Mossel Bay 371 6 19 1 Plettenberg Bay 233 6 13 1 Wilderness 309 161 296 2 TOTAL 4,023 9,733 25,077 801 (Source: Nelson Mandela Bay Tourism)

21 5.5 Accommodation In NMB Grouped Per Suburb

Town Suburb Rooms Beds Facilities Coega Coega 50 100 1 Port Elizabeth Amsterdamhoek / Blue Water Bay 90 191 8 Port Elizabeth Beachview 42 133 5 Port Elizabeth Bethelsdorp 6 12 1 Port Elizabeth Central 421 911 26 Port Elizabeth Colleen Glen 9 18 2 Port Elizabeth Fernglen 2 4 1 Port Elizabeth Greenacres 6 12 1 Port Elizabeth Humewood 902 2928 31 Port Elizabeth Hunters Retreat 20 30 1 Port Elizabeth Ibhayi 12 40 1 Port Elizabeth Kabega 3 6 1 Port Elizabeth Kwazekele 8 16 1 Port Elizabeth Lorraine 8 16 1 Port Elizabeth Maitland 3 8 1 Port Elizabeth Malabar 1 Port Elizabeth Mill Park / Linkside 131 283 17 Port Elizabeth Motherwell 4 8 1 Port Elizabeth Mount Road / Mount Croix 21 58 4 Port Elizabeth New Brighton 3 6 1 Port Elizabeth Newton Park 25 53 6 Port Elizabeth Redhouse 8 17 1 Port Elizabeth Richmond Hill 6 12 1 Port Elizabeth Sardinia bay 10 23 3 Port Elizabeth Schoenmakerskop 82 369 3 Port Elizabeth Seaview 111 323 13 Port Elizabeth South End 12 24 1 Port Elizabeth Summerstrand 1256 2807 72 Port Elizabeth Sunridge Park 4 8 1 Port Elizabeth Swartkops 16 24 1 Port Elizabeth Theesecombe / Colleenglen / Chelsea 60 169 7 Port Elizabeth Van Stadens / Blue Horizon Bay 10 29 3 Port Elizabeth Walmer 258 790 29 Port Elizabeth Westering 1 4 1 Uitenhage Rockside 9 69 1 Uitenhage Uitenhage 138 350 15 Uitenhage Van Riebeeck Heights 5 10 1 (Source: Nelson Mandela Bay Tourism)

22 5.6 Growth in NMB Accommodation Stock 1996 – 2006

Accommodation Type Number of Number of Number of Number of Facilities Facilities Beds Beds 1996 2006 1996 2006

Hotels 13 29 2895 3923 B&B / Guest Houses 100 141 1217 2019 Resorts 7 8 1433 950 Self-Catering 12 52 1563 2106 Backpackers 4 8 130 255

TOTAL 136 238 7238 9253

Commentary:

 The table above represents an accommodation audit undertaken in 1996 and 2006  The accommodation facilities cannot be directly compared because hotels and alternative accommodation were graded and classified differently in 1996 e.g. there were no Boutique Hotels classified in 1996  Accommodation available in caravan parks and camping sites has not been included in the above table but this normally is an indication of space available for self accommodation e.g. visitors provide their own tents and caravans  From the above comparison it would appear that the supply of accommodation facilities in Nelson Mandela Bay has increased by 75% over the 10 year period between 1996 and 2006 thereby increasing the stock of available beds for visitors by 28% or 2015 additional beds

5.7 PORT ELIZABETH AIRPORT

The airport currently handles more than 1 million passengers per year, over 38 770 air traffic movements and services all major domestic routes. Business travellers account for 60% of all passengers, while 80% of people passing through the airport reside in South Africa. This means that some 200 000 passengers a year are foreigners.

The airport handles some 822 798 kg of cargo per month. The airport infrastructure boasts two runways of 1 900m and 1860m respectively, 13 airport parking bays on the apron and terminals measuring 6 700 square meters. The main runway is equipped with full CAT 1 1LS system from both ends.

The modern terminal upgrade is able to handle up to 2 million passengers per year. Long term plans include extending the runway by 1 km in order to accommodate the larger passenger and airfreight carriers. The airport has already been awarded international airport status.

PORT ELIZABETH AIRPORT FINANCIAL YEAR AIR TRAFFIC ANALYSIS Passengers 2005/2006 2006/2007 Arrivals 647,640 714,600 Departures 656,121 724,245 TOTAL 1,303,782 1,438,845 (Source: ACSA Financial Year Report 2005/2006 compared to 2006/2007)

Air traffic through Port Elizabeth Airport has increased by 10% when comparing the financial year 2006/2007 with the previous year.

23 5.8 Analysis of current supply of hotel facilities in the Nelson Mandela Metropolitan area:

ESTIMATE ESTIM ESTIMATED GPS COORDINATES AVERAGE D ROOM ATED RACK AVERAGE GRADING (based NUMBER NAME LOCATION (lat/lon OCCUPANCIES NIGHTS ROOM RATE RATE on rate) OF ROOMS hddd°mm.mmm'(WGS84) (2004) AVAILABL NIGHT (achieved rate) E S SOLD

PRIMARY MARKET:

Beach Hotel Marine Drive, Summerstrand 6013 S33 58.883 E25 39.543 R 655 R 508FIRST CLASS 58 72% 21,170 15,242 Brookes Hill suites Brookes Hill Road, Off Beach Road, PE S33 58.696 E25 39.020 R 465 R 360MID-MARKET 68 73% 24,820 15,642 Chapman Manor House No.1 Lady Bea Crescent, Brookes Hill, Summerstrand S33 58.717 E25 38.971 R 435 R 337MID-MARKET 24 80% 8,760 7,008 City Lodge Cnr. Beach and Lodge Roads, Summerstrand S33 58.792 E25 39.260 R 530 R 396MID-MARKET 147 77% 53,655 41,314 Courtyard c/o Beach Road & Lodge Road, Sunnerstrand S33 58.816 E25 39.418 R 550 R 468MID-MARKET 64 80% 23,360 18,590 Edward Hotel Central Belmont Terrace S33 57. 782 E25 37.171 R 480 R 408MID-MARKET 96 72% 35,040 25,229 Formula One Cnr. La Ronche & Beach Road, Humewood S33 58.658 E25 38.892 R 224 R 224BUDGET 88 90% 32,120 28,908 Holiday Inn Garden Court Kings Beach La Roche Drive Humewood S33 58.648 E25 38.811 R 539 R 458MID-MARKET 280 65% 102,200 65,970 Humewood Hotel 33 Beach Road, Humewood S33 58.564 E25 38.805 R 430 R 293MID-MARKET 67 73% 24,455 17,952 Kelway Brookes Hill Drive, Humewood S33 58.725 E25 38.903 R 450 R 383MID-MARKET 65 46% 23,725 10,890 Marine Protea Hotel Marine Drive, Summerstrand 6013 S33 59.033 E25 40.015 R 570 R 485FIRST CLASS 98 72% 35,770 25,754 Paxton Hotel Carnavon Place, Humerail S33 58.217 E25 37.802 R 750 R 400FIRST CLASS 83 74% 30,295 22,418 Road Lodge Marine Drive, Summerstrand 6013 S33 59.646 E25 40.594 R 280 R 280MID-MARKET 92 91% 33,580 30,558 Summerstrand Inn Marine Drive, Summerstrand 6013 S33 59.631 E25 40. 629 R 550 R 425MID-MARKET 237 46% 86,505 40,138 TOTAL/AVERAGE R 387 1,467 535,455 365,614

AVERAGE MARKET OCCUPANCY 68%

SECONDARY MARKET:

Bayberry Fountain Hotel 7 Lutman str S33 57.494 E25 36.888 R 180 R 144BUDGET 5 83% 1,825 1,506 Belvia 245 Govan Mbeki Ave, North End S33 58.099 E25 37.721 R 80 R 80BUDGET 33 50% 12,045 6,023 Grand Gardens Hotels Central Belmont Terrace and White S33 57.787 E25 37.184 R 140 R 123BUDGET 40 76% 14,600 11,096 Old Central Hotel 193 Carledon Street, Uitenhage R 150 R 128BUDGET 22 N/A N/A N/A Park Place 45 Western Road S33 57.489 E25 36.945 R 170 R 138BUDGET 50 N/A N/A N/A Phoenix Hotel Chapel Street, Central S33 57.692 E25 37.295 R 150 R 108BUDGET 9 90% 3,285 2,957 Pine Lodge Resort Marine Drive, Summerstrand 6013 S33 59.614 E25 400661 R 436 R 371MID-MARKET 37 N/A N/A N/A Rose and Shamrock Hotel-Uitenhage 21 John Street S33 58.864 E25 32.605 R 120 R 86BUDGET 18 90% 6,570 5,913 Seaview Hotel 9 Elizabeth Road, Seaview,PE S33 57.185 E25 36.593 R 390 R 320MID-MARKET 25 40% 9,125 3,650 Swartkops Hotel Off John Tallant Road, turn right on R102N for 2.5 km S33 52.828 E25 36.905 R 225 R 174BUDGET 16 30% 5,840 1,752 TOTAL/AVERAGE R 167 255 53,290 32,896

AVERAGE MARKET OCCUPANCY 62%

N/A - occupancies were not available for these hotels. They were excluded from the calculation of average occupancy across the category of hotels because they represent a large proprtion (43%) of the total room stock.

5.9 REVISED TOURISM GROWTH PROJECTIONS NELSON MANDELA BAY METRO 2004 – 2010

2004 2005 2006 2007 2008 2009 2010

Foreign Tourist Arrivals 375 000 390 000 405 600 421 824 438 697 456 245 488 182 Average Daily Spend R1532 R1685 R1854 R2039 R2243 R2467 R2714 Average Length of Stay 3 days 3 days 3 days 3 days 3 days 4 days 4 days TOTAL VALUE R1 724m R1 971m R2 256m R2 580m R2 952m R4 502m R5 300m

Domestic Tourist Trips 1,900,000 1,957,000 2,015,710 2,076,181 2,138,466 2,202,620 2,268,700 Intra-Provincial Trips (75%) 1,425,000 1,467,750 1,511,783 1,557,136 1,603,850 1,651,965 1,701,525 Inter-Provincial Trips (25%) 475,000 489,250 503,927 519,045 534,616 550,655 567,175 Average Spend Per Trip R957 R1053 R1158 R1274 R1401 R1541 R1695 TOTAL VALUE R1 818m R2 060m R2 334m R2 645m R3 000m R3 394m R3 845m

GRAND TOTAL VALUE R3 542m R4 031m R4 590m R5 225m R5 952m R7 896m R9 145m (Source: NMMU Tourism Research Unit, June 2006)

Assumptions:

 75% of all the foreign tourists to the Eastern Cape Province visit Nelson Mandela Bay  4% of the domestic tourist trips taken in South Africa are to Nelson Mandela Bay  Foreign tourism is projected to grow by 4% per annum and by 7% in 2010  Domestic tourist trips is projected to grow by 3% per annum  Average daily spend of foreign tourists is inflated by 10% per annum  Average spend per domestic tourist trip is inflated by 10% per annum  The average length of stay of foreign tourists to NMB is 3 days  The length of stay of foreign tourists will increase from 3 days to 4 days by 2010