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Avoid tourism price hikes, warns expert

Sep 13 2013 07:21 Fin24

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Cape Town - South Africa is on the cusp of a major tourism boom, but it will only materialise if local tourism businesses can resist the temptation to put up their prices as the number of tourists continues to climb.

This is according to Anton Roelofse, regional general manager of Business Partners, a financier to small and medium enterprises (SMEs).

Roelofse sees several factors combining to create a “perfect spring” for one of the country’s most important job-creating sectors.

The most dramatic contributor being the fall of the rand - by as much as 25% over the past 20 months or so - which has once again made South Africa a sought-after affordable tourism destination.
 
He said that although the weak rand causes widespread pain throughout the economy, tourism is one of the sectors that benefits from it.

“Combined with other factors such as the emergence of Europe and the US from hard times, the awakening of a fast-growing African middle class to the pleasures of tourism and the lingering afterglow of the 2010 World Cup, the weak rand could usher in an unprecedented tourism boom,” he said.
 
Roelofse warned, however, that it will be short-lived if South African tourism businesses fail to learn from the last boom in the mid-2000s, which could have lasted longer if local operators had not priced South Africa out of the market.
 
“The local tourism industry has learnt an enormous amount since then,” said Roelofse, who advocates a high-volume, affordable-price approach and increased service levels as the only way to ensure that the whole sector experiences growth.
   
He said that with restraint and long-term strategy, South Africa has the chance to cement its reputation as an affordable, exciting tourism destination.

This, in turn, is good news for South Africa’s efforts to boost entrepreneurship, because the tourism industry is in many ways ideally suited for SMEs.
 
“The tourism sector is not very capital-intensive as it requires the type of personal attention that owners and managers excel at, and it offers a diverse range of opportunities, including accommodation, restaurants, tour operating, shuttle services and adventure tourism," he said.
 
The fact that the number of domestic tourists has remained unchanged highlights to him that South African citizens are keen to travel, but that they do not want to pay exorbitant prices.
 
About 87.6% of the 2.5 million visitors to SA in the first quarter of 2013 reported no negative experience in South Africa.

About 52% described locals as hospitable and friendly, up from 43% in the first quarter of 2012.

A similar increase was seen in positive answers to the question asked about local service levels. About 41.8% described service as good, up from 32.6% a year earlier.

The number of visitors describing South Africa as a value-for-money destination increased by 25% over the same period.

Business Partners' figures reveal that, apart from tourism being ideal for job creation, it also lends itself to economic empowerment.

The figures also show that no fewer than half of Business Partners’ tourism-business clients are female and a third of these clients fall within the BBBEE category.

“There is a large amount of under-utilised tourism infrastructure, such as accommodation capacity, as a result of the last boom and the World Cup hype," he said.

"The recession has shaken out marginal operators and those that remain have emerged stronger, wiser and ready for growth.”

- Fin24

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