The recovery of South Africa’s tourism sector continues to be constrained by a “missing middle” segment with industry players warning that rebuilding this market is critical to driving geographic spread beyond core destinations.
According to SATSA CEO David Frost, the country has lost a significant portion of its traditional mid-market base post-COVID with an estimated 500 000 potential international visitors no longer actively considering South Africa as a long-haul destination. This is reflected in overseas arrival figures, which declined from 2.7 million in 2017 and 2.6 million in 2019 to 2.1 million in 2024, recovering to 2.4 million in 2025.
The slow return of key European markets, particularly Germany and France, remains a major factor while the UK has recovered to 93% of 2019 levels.
Frost said the mid-market segment historically played a critical role in supporting geographic spread as these travellers are more likely to stay longer, self-drive and explore beyond major hubs.
“This is the segment that travels, that self-drives, that goes beyond Cape Town and Kruger,” said Frost.
Rebuilding this segment is therefore not only about volume but also about unlocking wider distribution of tourism spend.
Affordability remains the primary constraint, Frost added. Rising airfares post-COVID, compounded by current geopolitical disruptions, are placing pressure on mid-market travel, particularly group series. Structural issues such as road infrastructure, safety concerns and limited air access further influence traveller decision-making.
Frost also pointed to underutilised regions, noting that destinations such as the Northern Cape offer strong value and product depth.
From a destination marketing perspective, speaking to Tourism Update, SA Tourism Acting CEO Shamilla Chettiar said the mid-market remains a key contributor to geographic spread although high-end travellers still lead in multi-provincial travel.
“Our recent analysis reveals a decline in provincial distribution across all traveller segments: high, mid and lower markets,” she said. “Travellers in the high-end segment continue to have the broadest provincial coverage when visiting South Africa. The mid-market segment follows closely while the lower-end segment has a narrower provincial distribution.”
She noted that the mid-market segment remains the largest in overall volume and plays an important role in driving distribution across provinces, particularly from regions such as the Americas, Europe, Asia, Australasia and the Middle East.
Accommodation perspective
Guy Stehlik, BON Hotels Founder and CEO, said mid-market demand exists from international inbound markets including the UK, Germany, the Netherlands, France, Eastern Europe and selected Asian group markets. However, this demand remains volatile due to external factors such as politics, exchange rates and visa challenges.
He identified corporate travel as the more stable demand driver, providing consistent occupancy that underpins the viability of mid-market hotels.
“Where there’s steady business travel, mid-market hotels perform well and can be very profitable,” he said.
The segment is well-positioned to support geographic spread, particularly in secondary destinations where luxury developments are not commercially viable at scale, Stehlik added. However, this is dependent on the presence of clear demand drivers such as corporate activity, government presence or infrastructure investment.
Despite this potential, development in secondary regions remains constrained. Key challenges include inadequate infrastructure, unreliable municipal services, safety concerns, limited airlift and high build costs relative to achievable room rates. Skills shortages and inconsistent demand further complicate expansion.
Stehlik said these constraints require intervention at national and municipal level, warning that investment will remain cautious without improvements in enabling conditions.
Pricing pressure is another persistent challenge. Rising operational costs and high guest expectations leave little margin for error, requiring strict cost control and disciplined revenue management to sustain the model.
Destination positioning and demand
Chettiar said South Africa continues to position itself as a value-for-money destination across all segments rather than competing on price alone.
“Our marketing communications focus on positioning South Africa as a value-for-money destination, not the cheapest,” she said.
Affordability remains a key barrier in core markets, she added. “Most of our middle market in Europe and the UK see the price of airline tickets as a major barrier to visiting South Africa.”
To address this, SA Tourism is focusing on showcasing a range of mid-market products including three- and four-star accommodation, family lodges, guesthouses and self-drive routes, particularly through trade and media engagements.
“A key pillar of this approach is our speed dating programme at the Africa Travel Indaba where we introduce our hosted buyers to SMEs, which are often best positioned to deliver authentic high-value experiences at accessible price points,” added Chettiar.
She said the country’s positioning remains centred on accessibility across price points and highlighted the recovery of mid-market demand across several regions including Mozambique and Zambia in Africa’s land markets as well as the Democratic Republic of the Congo, Ethiopia, Ghana, Kenya, Tanzania and Uganda in air markets.
In Europe, the Netherlands, Belgium, Russia and Spain are leading recovery while the US and Brazil are showing slower recovery in the Americas. Australia, New Zealand and the United Arab Emirates are also showing recovery in the Asia, Australasia and Middle East region.
Frost and Stehlik agree that the mid-market remains underdeveloped.
Frost said rebuilding the segment will require a more deliberate strategy including improved air access, targeted market positioning and stronger engagement with key source markets.
He highlighted the growing role of artificial intelligence (AI) in shaping travel decisions as AI-driven tools are increasingly influencing itinerary design, experience discovery and travel decision-making. “It is therefore imperative that we leverage AI not only for market intelligence but also to ensure that we are feeding these systems with clear, accurate and well-structured destination information,” said Frost.
