Tourism: So much potential, going to waste

Source: Financial Mail, 13/04/2017

SA’s tourism sector broke records last year, with the number of
arrivals jumping 12.8% to a little over 10m. But while this seems
impressive it is far short of the potential for a sector earmarked by
government as a key driver of growth and employment.
I estimate SA could be doing 20% better in terms of foreign tourist
numbers says David Frost CEO of the Southern Africa Tourism Services
Association.
The crucial measure of success is the ability to attract overseas
tourists. They account for most of the big spending and, on paper at
least SA did well last year to lift this number 17.9% to 2.254m.
In reality however this was driven largely by the weak rand and the
relaxation of silly regulations rather than a more savvy tourism strategy.
Since 2015 the rand has weakened from about R11.70/$ to about R13.87
now â€" though it did recover from a horror fall to about R16.86 owing
to Nenegate.
In 2015 tourism numbers also fell 4.8% thanks to draconian visa
regulations imposed by former home affairs minister Malusi Gigaba who
demanded that visitors produce birth certificates for their children.
Mercifully that ruling has since been relaxed.
A better sense of 2016s overseas tourist numbers is gained by
comparing them with those for 2014. Here the industry seemingly
performed well with growth over the two years at 12.2%.
Still Otto de Vries CEO of the Association of Southern African Travel
Agents is not impressed. Growth could have been far higher if not for
home affairs obstacles he says.
His point is borne out by the performance of Australias inbound
tourist sector between 2014 and 2016. That country lifted foreign
tourist numbers by 19.7% over the two years to 6.9m.
New Zealand put in an even stronger showing lifting foreign tourist
numbers â€" excluding those from Australia â€" by 30.4% to 2.1m between
2014 and 2016.
The weaker rand should have provided a far bigger tailwind for
overseas arrivals last year. This benefit was eroded to some extent as
the rand gained back some of its lost value â€" until President Jacob
Zuma s cabinet reshuffle.
Lee-Anne Bac a director of advisory services at Grant Thornton
believes SA felt the impact of the rands strengthening and points to
overseas tourist arrival growth slowing to 13.1% in November and 10.7%
in December.
Frost explains that most bookings to SA are made through tour agencies
that hedge their currency risk forward for six to 12 months. When
those hedges unwind tour operators face a 25%-30% rise in overall
costs he says.
We have seen a pushback from European tour operators on bookings [for]
late 2017 and into 2018 says Johan Groenewald CEO of travel group
Royal African Discoveries.
SA s tourism industry needs all the help it can get. The department of
home affairs is well placed to provide this help â€" but its track
record does not bode well.
The department made it somewhat easier for Chinese and Indian visitors
to obtain visas. However still hanging in the air is the matter of
unabridged birth certificates for children under 18 entering or
leaving SA. The issue is fraught with confusion for foreigners. Home
affairs does not specifically require a birth certificate any more but
strongly advises that one is provided.
More certainty on wording is needed says De Vries.
As matters now stand travellers heading for SA with children who
arrive at a check-in counter without a birth certificate are routinely
turned away by airline staff.
Airlines will not take the risk of having to foot the cost of sending
people refused entry into SA home says De Vries.
The situation comes at a huge cost. About 13,000 people heading for SA
were turned away at [foreign] airports last year says Frost. It is a
public relations disaster for SA.
Gigabas intention with these rules was to stamp out child trafficking.
But it is not as if trafficking is not a concern to other countries.
They use other more precise methods such as passenger profiling in
co-operation with Interpol says Frost. It is time for home affairs to
wake up and operate like the rest of the world.
With GDP growth likely to be lower than 1% and foreign investors
unlikely to be rushing to invest in a junk-rated country, tourism is
one of the few ways the country can claw back lost ground.
In particular tourist mecca Cape Town attracted 84,493 overseas
tourists in December 2016 alone â€" a third of all offshore arrivals and
a 29% rise over December 2015.
Cape Towns tourist growth sparked something of a new hotel boom in the
city’s central business district too. Tsogo Sun is building a 600-room
hotel in the city for R680m while Marriott is to build three hotels
with a combined capacity of 539 rooms. Investment is the tourism story
says Frost. It creates construction jobs and when completed projects
create jobs in the hospitality sector.
Welcome as Cape Towns tourism-driven hotel expansion is SA should
aspire to far greater things â€" as developments in Australia show. In
that countrys pipeline are 228 new hotels set to add 34,700 rooms at a
total cost of A$8bn (R80bn) reports Tourism Accommodation Australia.
It is says the organisation in response to [huge] growth in tourism
demand.
What it means: Tourist numbers have been affected by home affairs visa
requirements for children