The South African tourism sector is set to bounce back as it benefits from a fall in the value of the Rand making the destination more affordable. According to South Africa Tourism, tourism had increased during 2013,as arrivals reached almost 8 million with still two months of the year to go. Visitor numbers from outside Africa rose 6.1%, led by Asia (9.1%), Central and South America (6.3%), and Europe (6.2%). The largest non-African source market remains Europe, with 1,168,834 arrivals.
The upturn in business is a relief to businesses in the tourism sector, following its hosting of the World Cup, but since that event business has been slower, leaving many new hotels constructed for the event, feeling the pressure. CEO of Cape Town Tourism, Enver Duminy, “We are emerging from the post-tournament dip and are starting to see demand slowly absorb the oversupply.”
The industry recovery should help buttress South Africa’s tourism which the World Travel Council (WTTC), a global industry body, estimates the sector’s direct contribution to GDP at 3.2% in 2012, with an overall impact of almost 10% of GDP. But more importantly, tourism is also a job-generator, accounting for almost 1.4m jobs directly and indirectly.
There is also evidence that the softening of the Rand is contributing to an upswing in tourism business. In 2013, the Rand fell 19% against the dollar. While a weakening currency is a risk to a national economy by driving up the cost of imports, it also makes a country more affordable as a destination and cheaper for foreign tourists.
Reports suggest that the biggest impact has been on the luxury travel sector, with tourists who would previously have stayed in mid-range hotels able to upgrade due to lower prices. South Africa’s reputation as a value-for-money destination has been further boosted by the perception that high-quality hotels and resorts are now good value for money.
South African tourism understandably focuses on the country’s strengths in the leisure segment – its scenery, wild-life, good weather, wines, beaches and lively cities. However, business tourism makes up about 30% of tourism spending in South Africa.
South Africa’s position as a prominent emerging economy has supported the setup of new business opportunities that in turn strengthen of its meetings, incentives, conferences and exhibitions (MICE) sector. Enver Duminy, CEO of Cape Town Tourism said, “Business tourism, and specifically the MICE segment, will be a key driver for growth in South Africa’s tourism sector,”
The enhanced cooperation between the major cities of Johannesburg, Cape Town and Durban, expect to attract large scale international events and the MICE segment can complement the seasonality of traditional tourism.