Key factors influencing foreign direct investment in the tourism industry in South Africa

The purpose of this paper is to identify the key factors influencing foreign direct investment (FDI) in the South African tourism industry. This is done in order to successfully attract and sustain FDI as well as to remain competitive.

A survey was conducted by means of questionnaires that were completed by various estate agents in South Africa that specialise in dealing with foreign direct investors. The descriptive statistical analyses were performed by using the Statistical Programme for Social Sciences (SPSS 15.0). A factor analysis with Promax rotation was performed and five key factors were identified.

The findings indicated the following key factors: namely perception and infrastructure, government and policy, economy, competitiveness, and nature. The results also indicated which type of product is preferred by which international market.

The results can be used to assist government policy on FDI as well as to assist marketers to focus on specific issues in their marketing campaigns.

The paper makes the following contributions: first, it gives greater insight and understanding of the decision making of foreign investment in the South African industry. Second, it is the first time that this research has been attempted in South Africa. Third, it shows the close relationship between FDI marketing and tourism marketing.