SA tourism: Thank goodness for the pesky rand

When Malusi Gigaba’s home affairs department forged ahead with new visa rules last year, a blanket of gloom surrounded the already struggling tourism industry.

Mounting concerns about the visa rules were warranted as various industry players estimated that international tourist arrival numbers and the would-be direct spend declined after the new visa rules took effect in June 2015.

Seventeen months later, the domestic tourism industry appears to have digested the rules and international visitor numbers are starting to recover.

Latest figures from Tourism SA, which is responsible for marketing the country, show that the number of international tourists visiting SA (excluding transit tourists) grew by 19.7% from January to August 2016 compared with the same period last year.

About 1.6-million international tourists visited SA – with the growth coming from the best-performing region Asia (41.2%), followed by Central and South America (19%), North America (17.9%) and Europe (15.9%).

It’s now compulsory for anyone travelling to SA to carry an unabridged birth certificate for their children (under the age of 18) or risk being declined entry.

The second big change is that tourists from countries that are required to have a visa – like India, Russia and China – now have to appear in person for the visa application process at visa processing centres in their home countries to obtain a biometric visa.

Home affairs calls the rules necessary in curtailing child trafficking; industry players call them onerous for international tourists.

The favourable rand

Several factors are at play for the industry getting its mojo back, chiefly the weak rand.

The rand has been on a rollercoaster ride this year, weakening against the dollar at the beginning of the year and strengthening by 8.8% in the year to November 25. Of course, the swings in the local unit makes it cheap for international tourists to visit SA.

SA Tourism CEO Sisa Ntshona says any changes to the exchange rate don’t necessarily translate into increased bookings by international tourists immediately.

“There needs to be quite a lot of forward planning to be done before they come to SA. But there is a competitive advantage point that we need to capitalise on,” Ntshona tells Moneyweb.

He admits that SA tourism is in a better shape than in 2014/5, the height of the Ebola outbreak. Although Ebola was concentrated in West Africa, SA was also inadvertently viewed as a risky destination.

MD of the Flight Centre Travel Group Andrew Stark says SA “is a very favourable destination now for international tourists.” “They find it overwhelmingly positive to come into the country with their hard currency as they are maximising value for their buck,” says Stark.

To sustain the booming international visitor momentum, SA needs to make sure that there is little red tape for them to visit, he says.

Other reasons behind the recovery in international visitor numbers include new flight routes to Brazil, China and others; the opening of visa facilitation centres in China; and improvements in visa processing on the African continent.

Faltering domestic travel

But these efforts are still undermined by limited visa-processing capacities and confusion over the immigration rules in some regions.

“We are starting with serious marketing campaigns in 2017 to really make a case for SA tourism and stimulate the sector,” says Ntshona.

Another problem area is the weak domestic travel industry by South Africans. About 5.4 million domestic trips were made in April to June 2016, which represents a 6% decline compared with last year, according to Tourism SA.

CEO of leisure travel agency Pentravel, Sean Hough, says the reason behind the decline in domestic trips is consumer affordability issues. After all, vacation travel spend is still reliant on consumers’ disposable income, which is impacted by a sustained rise in living costs, interest rates and a heap of debt.

Hough adds that local business/corporate tourism is the antithesis as it is strong.

Ntshona says leisure holiday is still out of reach for many South Africans. “We still need to make a case for tourism in SA. The average South African sees tourism as being far away and only for rich people,” he says.

At a time when mining and manufacturing (the biggest contributors to SA’s gross domestic product) are faltering, tourism is increasingly being eyed as the next growth vector for the domestic economy.

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