WHY TOURISM SECTORS SHARES WILL CONTINUE DO WELL ON THE JSE TODAY

The tourism sector represent a key part of the South African economy. Some of the key players in the sector listed on the JSE include: City Lodge Hotels, Sun International, Tsogo Sun, wilderness international among others.

One should expect these shares to continue to do well on the JSE as we approach December for a couple of reasons: this is the festive season and lots of tourist will be making us of the variety of services offered by these businesses and this will result in increases in sales, revenues and earnings.

The price of oil continue to decease and has a positive impact on the sector as their costs decrease and thus improving revenue.

If you still do not believe me, watch out for statistics South Africa data to be released today on tourist accommodation for September. One should expect an increase in total income from tourist accommodation for September compared to that of August 2014 which increased by 8, 3%. There was an 11.9% increase in income from accommodation year on year in August, the figure should show improvement in September figures to be released today. According to Stats SA, in August 2014, the types of accommodation that recorded positive year-on-year growth rates in income from accommodation were guest-houses and guest-farms (14, 5%), ‘other’ accommodation (12, 7%) and hotels (11, 6%). The main contributors to the 11, 9% year-on-year increase in income from accommodation in August 2014 were hotels (contributing 7, 3 percentage points) and ‘other’ accommodation (contributing 3, 9 percentage points).

Revenue improvements should be expected from the impact of reduced costs as petrol prices have decreased. As the weather in South Africa continue to improve. Many more local and international tourist will continue to flood into various parts of the country and this will impact positively on the business in the sector.

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