Weak rand = more tourists? Don’t be so sure

1 year ago written by

Tourism industry insiders have rubbished claims that the weaker rand will bring more tourist to South Africa.

In a positive spin on the recent downgrades of South Africa’s financial status SA Tourism CEO Sisa Ntshona says tourism has the potential to pull South Africa out of the downgrade because of the better value-for-money option for tourists being offered by the country.

Yet, says Abang Africa Travel’s Henko Wentholt in response to an article on TourismUpdate.co.za, potential overseas visitors to the country are not aware of the drop of the value of the rand, they are only reading about the “firing of ministers, state capture and protests. That will have much more of an impact on tourism numbers than credit ratings”. He says the long-term effect of this is a loss of confidence (in the country) and that will – once again – take years to negate.

Another industry insider, John Pieterse, claims the depreciation of the rand is not as influential as people might think. “The SA currency is now trading at levels consistent with the second half of 2015. In the meantime lodge-owners have increased their prices with double digit percentages twice. Where overseas operators benefitted in 2016 from the weak rand in combination with fixed rates, a majority of the lodge-owners must have thought it was their turn when they published 2017 rates. Please note that at the same time the rand has gained about 25 – 30% in strength since mr. Gordhan increased the SA interest-rates in order to support the rand. South Africa has become about 35-40% more expensive compared to last year.”

Both Standard & Poor’s and Fitch downgraded South Africa’s credit rating two weeks ago to BB+, also known as junk status.

TourismUpdate.co.za quotes Craig Drysdale, General Manager: Global Sales at Thompsons Africa who said the devaluation of the rand will make South Africa a more attractive destination, yet, outsiders’ perception and increased operational costs may wipe out any benefit. “Food costs go up, interest rates go up, so your input costs into hotels and businesses will increase”.

Sean Kritzinger, Managing Director at Giltedge Travel, agrees. He says that even with more tourists, they will inevitably pay more to enjoy the country’s food, wines, activities, products and services. “Whether these two factors will balance each other out is impossible to tell right now, but overall it is not good for the majority of South Africa and that means it’s not good for our tourism industry.”

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