Tourism spend in Joburg to hit 27bn

2012-06-12 08:15
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Johannesburg will be the second most visited destination city in Africa, with a projected 2.5 million international visitors expected to enter the city in 2012. This is according to the latest MasterCard Global Destination Cities Index.

In addition, international visitors are projected to spend more while visiting Johannesburg than any other destination city on the continent, with US$3.3-billion (about R27.8-billion $/R8.43) estimated to be injected into the city during 2012, an increase of 8.1% on 2011’s figures.

“This is the second installment of this MasterCard Index, which is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world,” said Dries Zietsman, country manager, MasterCard Worldwide, South Africa. “The Index ranks 132 global cities by their total international visitor arrivals and the cross-border spending by visitors in the destination cities. It also forecasts visitor and passenger growth for 2012.”

Thirteen African cities were ranked within the 132 cities including Cairo, Johannesburg, Casablanca, Accra, Nairobi, Beira, Cape Town, Dakar, Durban, Kampala, Lagos, Maputo, and Tunis.

Ahead of Johannesburg in terms of visitor numbers, and taking the top position in Africa, is Cairo with 3.3-million visitors expected in 2012, while Casablanca, with an anticipated 2.1-million visitors, is third.

Looking at international visitor expenditure in the African cities surveyed for 2012; Cairo takes second place after Johannesburg, with the city expecting to attract US$3-billion (about R25.2-billion $/R8.43) in cross-border spend followed by Casablanca at US$1.9 billion.

The three cities where most visitors to Johannesburg originate from are London (328 000 people), Frankfurt (196 000 people) and Dubai (166 500 people). Combined, these visitors are expected to inject US$975-million into the city’s economy in terms of cross-border spend during 2012.

In more detail, Londoners are expected to spend US$638-million during 2012 (an average of US$1 945 per person), those from Frankfurt will spend US$182- million (an average US$929 per person) while Dubai visitors will spend US$155-million (an average of US$930 per person).

Interestingly, 143 000 visitors are expected to travel to Johannesburg from Paris – however they will spend an anticipated US$332-million in the city during 2012, a substantial amount compared to visitor numbers and an average of US$2 320 per person – the highest average spend per person of all visitor

“The Index also reveals the destination cities where those from Johannesburg are travelling to, and it was found that in most cases they are opting for African destinations before they travel overseas,” said Zietsman. “Four of the top five outbound destinations for Johannesburg travellers are within Africa. Windhoek and Nairobi are the top two outbound travel destinations; London comes in third, followed by Harare and Luanda.”

In addition to Johannesburg, Durban and Cape Town were also surveyed. The Index reveals that Durban will be the fastest growing city in Africa for both visitor numbers and expenditure, and is predicted to be the second fastest growing city of all the 132 cities surveyed worldwide , with a projected 33.3% growth in the number of international visitors and 41.3% in visitor expenditure in 2012 – albeit off a low base.

Supporting this growth is the fact that Emirates Airlines has reaffirmed its confidence in Durban as a leading South African tourist destination, by increasing its capacity on its Dubai-Durban route by 30% from June 2012 in direct response to increasing passenger demand on this route from the Middle and Far East, China and Dubai.

“Additionally, the Durban International Convention Centre provides the largest flat floor, column free exhibition and conferencing space in Africa, attracting many international exhibitors to the city while playing host to some of the largest and most complex conferences and business events in the world over the past fifteen years,” said Zietsman.

Looking at Cape Town, the majority of international visitors to the Mother City are from London, with 185 000 visitors expected to spend US$361 million throughout the year. This is followed by 127 500 travellers from Dubai spending US$118 million, and 76,000 visitors from Amsterdam spending US$68 million.

In 2011, Tripadvisor, an influential online travel website, named Cape Town as the world’s top holiday destination, which led to British Airways using bigger planes on this route to increase capacity, as well as increasing its weekly flight schedule.

“Cape Town is popular with many travellers because of the wide-range of experiences it offers visitors, from surfing and sailing, mountain climbing and beaches, to its wine farms and world-renowned fine-dining establishments,” said Zietsman. “Its World Heritage Sites, magnificent natural surrounds and superior shopping opportunities add to its irresistible appeal.”

The world’s top destination cities
London topped the world’s cities by visitor numbers globally for the second consecutive year. Its number one ranking is based on a predicted uplift of international visitor numbers by 1.1% to a record 16.9 million. Paris, in second position, expects 16 million inbound passengers. Making up the rest of the top five global destination cities are Bangkok (12.2 million visitors), Singapore (11.8 million visitors) and Istanbul (11.6 million visitors).

Surprisingly, no US cities made the top 10 by visitor arrivals, with New York the first city to achieve a ranking at 13th spot, with 7.6 million inbound passengers expected.

London also ranked first in cross-border expenditure, ahead of New York in second place, with estimated spend in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively. Bangkok, Paris and Singapore make up the rest of the top five with visitor expenditure at US$19.3 billion, US$17.8 billion and US$12.7 billion to be spent in 2012 respectively.

While cities in Europe and the US still ranked highly on the Index, Dr. Yuwa Hedrick-Wong, global economic advisor for MasterCard Worldwide and author of the report, said that the number of emerging market Asian cities featuring in the top ten global destination cities on the Index showed Asia’s growing role in the global economy.”

“In addition, cities in Africa are also showing strong growth. Tunis, after the political upheaval in early 2011, is expected to show growth of 19.8% in visitor spend with an increase in visitor numbers of 17.7%. Nairobi also expects double figure growth: a 10% growth in visitor spend is expected off a 16.7% growth in visitor expenditure. Cairo, in spite of ongoing turmoil in Egypt, expects an 8.4% growth in spend off an 8.3% growth in visitor numbers,” explained Dr. Hedrick-Wong.

“This kind of growth pattern strongly suggests that destination cities in emerging markets in Africa will also continue to grow in importance in the global economy,” he said.

“In spite of the ups and downs of the business cycle, the overall pattern is clear: cross-border travel by air is a resilient trend that is embraced by a growing number of people across Africa, underpinned by visitors’ robust willingness and capacity to spend,” he concluded.

This Index and the accompanying reports are not based on MasterCard volumes or transactional data.

Methodology
The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities.  Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.

On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.

On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included).  An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.  

A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.  

This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).  

Please note, the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.

About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide
Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009.  Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing.  In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.    
 
Yuwa is also currently the HSBC Visiting Professor of International Business at the University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences.  

About MasterCard
MasterCard(NYSE: MA), www.mastercard.com, is a global payments and technology company. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.

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Read more on:    joburg  |  good news  |  travel south africa  |  travel international
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