Tourism could rebound thanks to fresh hope of foreign investment, says minister

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  • The Department of Tourism has prioritised talks with the Gulf Cooperation Council as a potential source for foreign direct investment.
  • Top of the list are investment opportunities in under-resourced areas, but with high tourism potential.
  • However, research shows a lack of disposable income will affect the way people travel.

Minister of Tourism Mmamoloko Kubayi-Ngubane is "highly encouraged" by interest shown in the country's tourism sector by both domestic and international investors, she told media on Wednesday.

"This gives hope that the supply side of the tourism sector will not only recover but has the potential to surpass where we were as a sector prior to the pandemic," she said.

According to Blessing Manale, spokesperson for the Department of Tourism, the ministry has prioritised engagement with the Gulf Cooperation Council (GCC) as a potential source for foreign direct investment (FDI). This is alongside traditional sources of FDI for the tourism industry such as the US, UK, Europe and Japan.

The department, working with the SA missions in Kuwait City and Dubai, has in the past two years, facilitated business-to-business meetings and seminars in a bid to attract tourism investment from that region.

Throughout the pandemic, the SA consulate in Dubai has engaged with investors to promote SA as an attractive investment destination. Some investors have shown an interest in SA product owners to discuss investment opportunities, with talks set to take place in September this year.

"From previous engagements, it appears that GCC investors are firstly keen in brownfield investments [using existing assets]. This could be because they first want to test the environment that they will be operating in. However, the department does not rule out greenfield investments as well," says Manale.

The most immediate matches will likely be between these investors and existing tourism assets forced into hardship or even closure due to the economic impact of the Covid-19 pandemic and related lockdown measures.

The department has prioritised investment opportunities in under-resourced areas with high tourism potential. These are in and around national parks, coastal and marine areas, world heritage sites and in-land waterways. Some of these will include initiatives on communally owned land.

Previously disadvantaged groups

Kubayi-Ngubane says inclusivity, transformation and sustainability are important, as there is a great responsibility to ensure that, while the tourism sector recovers from the impact of the pandemic, previously disadvantaged groups are not left behind. 

She said the Tourism Equity Fund will be used in this regard. 

In his State of the National Address in February this year, President Cyril Ramaphosa said the launch of the fund was key to stimulate transformation in the tourism sector.

Kubayi-Ngubane said international travellers must feel comfortable visiting SA. An analysis by her department, looking at the global situation, found that today's traveller is cautious about moving from one country to another.

"At the same time, they look for a country that offers diversity, something SA has to offer and puts us as a destination on the map. We are not just sitting waiting for the day borders open but are working to prepare intensely for international tourists."

Travel ready

"South Africa is Travel Ready" is a new collaboration among a group of public relations agencies in the tourism and hospitality sector. The aim of the campaign is to support the inbound tourism industry's efforts to open the country to international tourism as soon as possible.  

"There's demand, and we can operate safely," the group said in a statement. "Even with the small reopening of intra-provincial domestic leisure travel, we have already seen that there is pent-up demand for tourism and travel."

Assessing forward bookings for South Africa's high season, online accommodation booking system provider NightsBridge reports about a third of bookings (25 630) have been made for December 2020 to February 2021 versus the same period last year, which saw 77 175 bookings for December 2019 to February 2020.

Lack of disposable income

Research by Cape Town Tourism, the official destination marketing and management organisation for the City of Cape Town, shows a lack of disposable income will affect the way people travel, according to board chair Brett Hendricks, who said:

“Even before this pandemic and the lockdown, South Africans were struggling in an economy that had recently been downgraded to junk status. With the closing of many businesses over the past few months and the rate at which people are losing their jobs, purse strings are being pulled even tighter. This is concerning for us in the travel industry."

"Travel has always been perceived as a luxury and if our consumers are battling financially, it means that travel might not be as high up on everyone’s list as before. In essence, we need to start thinking of innovative ways to still attract travellers to Cape Town, and affordability and value-for-money offerings need to be a top priority for the entire travel and tourism value chain."
The survey showed that only 24% of respondents have disposable income, with most planning to use this money on necessities such as groceries, savings and health. Only 5% are planning on spending money on leisure travel any time soon.

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