News agency, Cape Town, South Africa
Monday May 20th 2019

The good and the bad of global cash crunch for tourism

While the crash in rand value might give inbound tourists more spending power, the global economic crisis would hammer middle income travellers in rich countries, forcing them to forego overseas holidays. This might in turn have a negative impact on small township operators in South Africa and hotels who relied on middle-of-the-market travellers.

This was the view of Camissa Township Tours operations and finance manager Garth Angus, who said many middle income earners in the US and Europe might lose their jobs and have limited disposable income. If they chose to travel they were more likely to do so in their home countries.

See-sawing markets blamed on a global credit crunch have led to fears of recession in the US and Europe. Last week the rand plunged to six-year lows against the dollar.

However, Angus said the two extremes of the tourism market – the wealthy elite and backpackers respectively – would be ” relatively unaffected” by the turmoil.

The rich would always have money to spend and budget travellers consisted mostly of students who raised money from part-time jobs.

The economic crisis would therefore be positive in terms of tourists having more money to spend as a result of a devalued currency, but negative because there might be less tourists.

Domestic tourists might not fill the gap because South Africans had relatives across the country and would not pay for expensive hotel accommodation. Domestic travellers also did not generally visit townships.

South African Tourism CEO Didi Moyle said her organisation was monitoring the economic turmoil “closely”, but there had been no decline in tourism arrivals to South Africa.

Moyle agreed that the rand’s crash would be beneficial in the short term. She said during tough financial times, people did tend to either travel less, or if they did travel, they looked for more affordable destinations or destinations closer to home that offered value for money.

She said South Africa was well placed to take advantage of these realities and continued showing good arrivals growth even during the “difficult macro-economic period”.

Moyle said there was not an economic sector in the world that did not have concerns about the economic outlook.

But she said the South African tourism sector was not dependent on one country or region for its tourism, although the industry would have to work hard to remain competitive – especially in pricing.

She said total foreign arrivals to South Africa had grown by 7.8% between January and July 2008 in spite of tough global economic times. Arrivals from US and European countries continued to grow steadily.

In the first seven months of this year, arrivals grew 11.7 and 7.3% respectively for the US and Europe.

Chairperson of the Soweto Tourism Association Godfrey Mautloa said tourists from overseas would be the hardest hit by the economic crisis. But with the weakening of the rand, he said many South Africans would be encouraged to explore the country at a cheaper price, as opposed to travelling overseas.

“We need this,” he said.

* Reporting by Brenda Nkuna.

Tags: travel tourism

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