Rand recovery sees locals itching to travel as TBI shows bumpy ride ahead

2016-07-20 18:00
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Cape Town - If Brexit had any upside it’s the fact that the Rand isn’t as weak as it was, yet the Tourism Business Council of South Africa (TBCSA) reports that the persisting tough trading conditions in the South African economy are affecting businesses in the tourism sector.

While Tourist arrivals for the first five months of 2016 show a healthy 15.7% increase from the same period last year - more than three times the average annual global growth rates experienced in international tourism, below normal levels of business performance has been recorded in the 2016 Quarter 2 Tourism Business Index. 

'Bumpy ride for tourism sector ahead'

These are the sentiments highlighted in the latest results of the Tourism Business Index (TBI), published on Wednesday.  The report shows that businesses in the travel and tourism sector were trading under tough conditions in Q2, recording an index score of 78.9, significantly below the score of 100 points, which indicates normal business performance levels.

The score is also 7.3 index points below than the 86.2 forecasted for the second quarter of 2016. 

TBCSA CEO Mmatšatši Ramawela says that the Q2 results shows "recovery as a sector is going to be an even bumpier ride, considering all the added pressure inherent in the broader economy".

"We still have the after effect of Brexit to contend with, considering that both the EU and the UK are amongst our primary source market for both our business and leisure travellers,” says Ramawela.

Brexit Rand/Pound exchange boost

Following Brexit though the Rand continues to recover against the Pound, as the exchange has dropped below R20 to a more comfortable R18.85/Pound while the dollar has improved from its dark days of R16/Dollar and now hovers around R14.30.

However this is good news for anyone with aspirations of travelling internationally, says Sean Hough, CEO of leisure travel specialist, Pentravel, especially when considering the savings that package-holiday providers offer. 

“Market volatility always causes skittishness among travellers as they watch the exchange rates like a hawk, especially when we’ve been on a financial rollercoaster for months. Fortunately, leisure travel specialists like ourselves are unaffected by the yo-yoing Rand as rates are set months in advance and travellers pay a set fee and enjoy everything thrown in. They literally can leave their wallets at home.”

Despite the inherent value of a package holiday, Hough says South Africans are still cautious and choosing to play closer to home, either to travel domestically – which offers a welcome boost for local tourism, fly East to the islands of Zanzibar and Mauritius or cruise local shores. 

'Spike in Zanzibar and cruise getaways'

“We’ve experienced a 285% spike in sales to Zanzibar and a 23% y-o-y increase in local cruise getaways; this is very encouraging despite the unpredictable economy,” he says.

A flourishing market in the UK, package holidays have become synonymous with value for money – regardless of where in the world one goes. Which is why 65% of Pentravel’s sales are repeat business. 

"Given value is on everyone’s lips these days," says Hughes, "travel agents are invaluable in this regard and in order to meet demand the agency has opened up two new stores". 

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