Cape Town’s tourism sector is enjoying record visitor numbers and revenue, but its growing dependence on international travellers could leave the city vulnerable if domestic tourism continues to decline.

The Cape Town Tourism 2025 Economic Value of Tourism report found that tourists contributed R24.5 billion to the city’s economy during the year, with international visitors accounting for R19 billion of this expenditure.

Tourism represented 6.3% of Cape Town’s total gross value added (GVA) and sustained more than 106 000 jobs. However, the report also showed that domestic visitors stayed for fewer nights and spent less per day.

According to Prof. Peet van der Merwe from the Tourism Research in Economics, Environs and Society (TREES) research unit at the North-West University (NWU), these trends reflect the financial pressure facing South African households.

“South Africans are struggling because the economy is struggling. Holidays are among the first luxuries people cut when they need to reduce their expenditure. They take shorter holidays and spend less,” he says.

Cape Town may also be becoming too expensive for many domestic travellers. Prof. Van der Merwe believes some South Africans may fly into the city but spend most of their holiday in the surrounding winelands, smaller coastal towns and other parts of the Western Cape.
While Cape Town’s ability to attract high-spending international visitors is a significant strength, the city should guard against becoming overly dependent on this market.

“We saw what happened during the Covid-19 pandemic. Suddenly, the hotels were empty, and only then did many of them begin offering more affordable accommodation to South Africans,” he says.

“Cape Town should be very careful about relying too heavily on international travellers. It needs to maintain a balanced market because, if another international crisis occurs, it will be domestic tourists who continue travelling locally.”

Value matters more than volume

Cape Town’s Tourism Framework 2030 aims to increase annual visitor spending to R34 billion and double the number of tourism jobs by 2030. Prof. Van der Merwe says the city should pursue these targets by focusing on visitor value rather than simply attracting ever-increasing numbers.

“The objective should be to encourage tourists to remain in Cape Town for longer and spend more during each visit.”

This approach could help the city grow tourism revenue without placing excessive pressure on infrastructure, housing and local communities. The quality of the visitor experience must therefore remain central to Cape Town’s tourism strategy.

Growth should also extend beyond Cape Town’s most popular attractions and neighbourhoods.

“It is important not to focus only on central Cape Town. Tourism must be spread to local communities, smaller districts and towns where tourism products already exist or could be developed. This would allow the income generated by tourism to reach more communities,” Prof. Van der Merwe says.

Supporting local entrepreneurs should form part of this strategy. Communities should be assisted in developing viable, consumer-focused tourism products that respond to what visitors want while showcasing local culture, heritage and natural attractions.

Such support could help small, medium and micro enterprises (SMMEs) grow, create jobs and ensure that more of the economic value generated by tourism remains within host communities.

Making Cape Town affordable for South Africans

Cost remains the biggest barrier to domestic tourism, particularly while household incomes are under pressure. Prof. Van der Merwe says government, airlines, accommodation establishments and tourism operators should work together to develop packages specifically for South African travellers.

These could include discounted flights, accommodation and activities during quieter periods of the year, when Cape Town receives fewer international visitors.

“Cape Town should identify the times of the year when it is less busy and market affordable packages to South Africans. Tourism products and their prices should also be designed with the domestic market in mind because South Africans are highly price-sensitive,” he says.

The city could also offer more accessible activities aimed specifically at domestic visitors. Many South Africans may currently spend only a day or two in Cape Town before travelling elsewhere in the province.

“If this is the case, Cape Town needs activities that South Africans can afford, enjoy and fit into shorter visits. Our economy is struggling, so cost will remain the most important consideration.”

Cape Town offers lessons for the rest of the country

Cape Town is widely regarded as South Africa’s flagship tourism destination. While its mountains, coastline, winelands and international profile provide it with natural advantages, Prof. Van der Merwe says its success is also rooted in effective governance, reliable infrastructure and consistent destination management.

“Cape Town has good governance and consistency. Its infrastructure is excellent when compared with that of many other provinces, particularly the condition of its roads,” he says.

Effective local government plays a crucial role by ensuring that infrastructure remains functional and tourism attractions are accessible. Cape Town is connected to major national routes such as the N1 and N2, has an international airport and benefits from extensive coastal access.

“These factors make it relatively easy for tourists to reach the city and travel throughout the surrounding region,” Prof. Van der Merwe says.

Other cities and provinces may not have Cape Town’s precise combination of natural attractions and international connectivity, but many possess significant cultural, heritage and nature-based tourism assets. The central lesson is that attractions alone are not enough.

Destinations need functioning infrastructure, effective governance, consistent marketing, accessible transport and support for local tourism enterprises. When these elements are in place, tourism can generate opportunities well beyond hotels and major attractions.

“Tourism creates opportunities across the economy. Where effective government is in place, it can help SMMEs to develop and grow, which in turn creates employment,” Prof. Van der Merwe says.

Cape Town’s record tourism performance is therefore both an achievement and a reminder: international visitors can generate substantial economic value, but a resilient tourism economy must remain accessible to South Africans, distribute its benefits more widely and balance growth with the needs of local communities.