WHERE OUR INDUSTRY IS HEADED
Although there has been a new sense of optimism in South Africa since Cyril Ramaphosa became the president earlier this year, business and consumer confidence have remained at a relatively low ebb. This has definitely had an effect on business and leisure travel, which by its very nature relies on significant levels of optimism, certainty and confidence.
The first quarter of 2018 showed a very disappointing gross domestic product performance, indicating that the economy is still extremely vulnerable and in need of a range of stimulating factors that create improved confidence and lead to greater levels of investment and spending in the economy.
While the political changes in the country have been welcomed by financial markets, it is taking time for these to lead to meaningful changes and growth in the economy, which has been impacted by a backlog of challenges and several domestic and external influences.
The Western Cape – particularly greater Cape Town – has been severely affected by the drought and water shortage which has had a negative impact on both business and leisure travel to the area. It is hoped that the 2018 winter rainfall will continue to positively impact dam levels, which continue to improve as the season progresses. On a brighter note, the severity of water restrictions in the region has changed people’s attitudes to water and sharply reduced water usage levels. These attitudes and behaviour patterns are likely to become the norm as individuals, families and businesses realise the importance of conserving this vital resource.
On a national level, the increase in the VAT rate from 14% to 15% has impacted consumer confidence, but this is likely to be a short-term influence as the new rate is absorbed into budgets and the economy as a whole.
President Ramaphosa has highlighted the vital importance of tourism as an employment creator and income generator in the economy. It is hoped that guidance from the top will filter down to creating a more enabling environment for sustained growth in the tourism sector. In this regard, while certain amendments to the current visa requirements were announced, these have unfortunately not gone far enough to make a meaningful difference, in particular towards family travel.
The Tourism Business Council of South Africa continues to play a valuable role in the development of the sector as it relates to both business and leisure travel, both of which are essential ingredients for maintaining a healthy economy.
After staging a strong recovery from December 2017 into early 2018, the Rand weakened again towards the middle of 2018, partly on a stronger US currency and a pullback from emerging market investments. In conjunction with a rise in oil prices to close to US$80/barrel, this has again impacted travel patterns for people travelling for business or leisure purposes. Budgeting has become more important than ever for companies and individuals, prompting them to seek and expect greater value adds in their travel and accommodation experiences.
The group’s Kenya operations were affected by the unrest and uncertainty surrounding the country’s 2017 general election, and its subsequent rerun, but trading conditions have recently improved along with a more stable environment.
In South Africa, the lead up to the country’s next general election in 2019 will be a major focal point and is likely to influence decision-making in various aspects of the economy.
In line with the growing international trend, online booking platforms are continuing to grow their market share as travellers adopt user-friendly options to book and manage their travel arrangements.
Social media channels are playing an increasingly crucial role in feedback generation for the hospitality industry and this trend is expected to continue as consumers increase their interactive relationships with service providers.