Cautious optimism about SA tourism

(Supplied)
(Supplied)

Cape Town - Depending on the stability of the South African economy, one could be cautiously optimistic about the outlook for the local tourism industry, Danny Bryer, director of sales, marketing and revenue management for Protea Hotels, told Fin24 on Tuesday.

"Naturally one would always want the rand to improve, but if it stays at current levels - which economists predict it will do - then we should see positive growth in all segments of the tourism accommodation industry," said Bryer.

He cautioned, though, that this growth would be from a low base, due to the prior negative impact created by the change in visa requirements as well as incidents of unrest in the country.

"Our forward projection, however, looks good, especially in the luxury hotel accommodation segment. There has been significant growth in this segment in the last quarter," said Bryer.

In his view, this is mainly due to the rand/dollar exchange rate, coupled with what he describes as more travellers becoming aware of the latest relaxation SA visa requirements, making travel to the country easier again.

"Our foreign guests include individuals coming on holiday, tour groups (especially from the German market), the incentive market, conference delegates and also the film and advertising industry in Cape Town," said Bryer.

"So when you look across the spectrum, there has been significant growth, but coming off a low base. The impact could be even more positive if we have stability and easy elections in SA. Then we will see even more tourists coming to the country."

The luxury accommodation segment suffered since the economic crisis in 2008 and due to an oversupply ahead of the Fifa Soccer World Cup in 2010. Occupancy levels took a hit as did pricing as some of these luxury hotels discounted to levels more in line with 3- and 4-star establishments.

Bryer explained that, in general, 5-star hotels usually suffer first when the market slows down and the hotel accommodation market becomes very competitive due to lower demand. Over the past few years 3-, 4- and 5-star hotels, therefore, often competed for the same market. But now that the rand has weakened, Bryer sees foreign 5-star guests again preferring to stay in 5-star hotels.

"These guests are now again prepared to pay more to stay in 5-star hotels. We have, therefore, seen an increase in the room rates and occupancy in 5-star hotels," said Bryer. This trend is especially visible in Cape Town and Johannesburg.

In Cape Town the film industry also often uses luxury accommodation. The weaker rand has also had a positive impact on the incentive market.

There has been a "re-introduction" to SA of the former standard international visitors from Germany, the UK and the US back to SA cities, due to the weaker rand, according to Bryer.

"Remember, SA is a long haul destination and the relaxation of our visa regulations has made a positive impact for sure. Due to terror incidents in Europe, more tourists are also starting to see SA as a safer long haul option," he added.

As for Johannesburg, he sees a positive impact of increasing business travel from other African countries, like Ghana Nigeria, Tanzania and Zambia.

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