Business and consumer confidence has remained under pressure and at historically low levels within South Africa, along with high levels of unemployment and political uncertainty.
Economic growth has been negatively impacted with South Africa falling into a technical recession in the early part of 2017, but returning to low growth in the second quarter.
Levels of midweek business travel have been impacted by the combination of low business confidence and low economic growth. A trend has developed in which some business travellers have shortened their stays or “traded down” to lower graded and less expensive hotels and other types of accommodation offerings and establishments. Weekend travel has been affected by pressure on consumers and their disposable income.
Botswana’s economic fortunes are closely aligned to those of South Africa, while in East Africa, the Kenyan economy continued to show an improved performance in the first half of the 2017 financial year, but was negatively impacted in the last quarter of the year in the lead-up to the Kenyan elections on 8 August. Despite a few incidents of violence and alleged voting irregularities, the Kenyan elections were successfully held and declared to be largely free and fair by an African observer team which included former South African president, Thabo Mbeki.
Both business and leisure travellers are increasingly focusing on accommodation options that take their evolving and changing needs into account. These needs vary from location, style and budget to issues such as information technology accessibility, catering options, energy efficiency, environmental awareness and a range of other features and services.
The South African Reserve Bank has forecast that the country’s economy will grow by about 1% in 2017. While this is an improvement on 2016, it is still extremely low and does not provide the necessary impetus needed for sustainable economic improvement that will positively affect the business and consumer sectors of the economy.
There are signs of economic improvement in South Africa with the South African Chamber of Business’s confidence index reaching a five-month high in July, based mainly on a slight strengthening in the value of the Rand, a drop in inflation and a 0,25% cut in interest rates in late July. However, economic and currency volatility and political uncertainty are expected to be major influencing factors for the remainder of 2017 with rating agencies keeping a watch on developments ahead of the ruling party’s policy and leadership conference in December.
In line with the weak economy and saturation in some locations, new hotel development in South Africa is subdued with relatively few new projects or openings on the drawing board. In Southern Africa and East Africa, the announcement of new hotel developments has slowed down after the launch of several new projects in recent years, including our own group’s developments in Kenya, Mozambique, Namibia and Tanzania.
Online booking platforms continue to make inroads into traditional booking channels. This trend is expected to continue as travellers increasingly make use of highly efficient and convenient mobile technology to organise their business and social lives.