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Boston, MA -- (SBWire) -- 06/17/2013 --BMI View: Despite the risk of some limited short-term political uncertainty, we still perceive South Africa as offering extremely attractive investment opportunities for hotel groups and other tourist-related industries - largely due to rising domestic tourism and regional tourism, supported by an increase in higher disposable incomes.

This quarter BMI has revised and restructured its tourism reports, incorporating a greater range of data and focusing on the hotel industry, the value of the tourism industry itself, and the impact of macroeconomic factors.

Although there is significant long-term potential being offered by the local tourism industry in South Africa we have come concerns about the risk of short-term political unrest undermining confidence in the country's safety and making it a less attractive tourism destination. South Africa also still needs to invest in to improving infrastructure and service standards across the industry, so that it can attract more tourists from high-income nations.

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For 2013, BMI forecasts a 9% increase in tourist arrivals, to reach 9.78mn. We believe there will then be further growth in arrivals, of some 36%, over the 2013-17 period, to reach 13.23mn arrivals by end-2017.

Given this rapid expansion in visitor arrival numbers, BMI is also forecasting the value of South Africa's hotels and restaurants industry to increase by a staggering 62% in US dollar terms over the 2012-2017 period, to reach US$14.75bn. In GDP terms, the contribution of the hotels and restaurants industry to overall GDP will rise from 2.38% in 2013, to 2.76% in 2017, underlining our upbeat stance on the South African tourism industry over the medium term.

An overview of South Africa's Top 10 inbound tourism markets highlights the fact that it remains heavily dependent on neighbouring sub-Saharan African states (Zimbabwe, Mozambique, Lesotho, Swaziland, and Botswana) for the bulk of its tourism. One key challenge for South Africa will be to boost the numbers of tourists arriving from higher-income nations over the coming years. The World Cup was a major revenue generator in this regard, although there is some concern that overinflated prices for accommodation and flights during the tournament could damage South Africa's prospects of enticing tourists back. It is also worth adding that the political and economic instability in neighbouring Zimbabwe remains an ongoing threat to South African tourism.

Looking forward, rising numbers of both leisure and business travellers visiting South Africa, many from Asia and the Middle East, should attract additional international hotel chains to set up hotels in East Africa's biggest economy. In this context, UK-based hotel chain Millennium & Copthorne is due to open its first hotel in South Africa in 2014, a 250-room lifestyle resort in Balltito, north of Durban.

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