Wiza Nyondo, Head of Niches at FNB Business believes that the substantial rise in the cost of living poses a challenge for tourism business as consumers will be wary on discretionary expenditure.
"Any negative adjustment in disposable income will always be a concern as it limits the possibility of travelling. Even though the tourism industry has proven its resilience over the years, the main issue is that the current costs affecting consumers are unavoidable. People are obligated to pay tax, they need water and electricity so the possibility of scaling back on activities such as travel, is very high.
"The current conditions also place pressure on tourism businesses to devise new ways and packages to attract domestic visitors. An important factor to consider is that consumers will be doing more with less, therefore, tourism businesses need to offer cost effective ways of meeting customer needs, such as offering group packages and combining certain offers at discounted rates," he adds.
Indications are that South African citizens will have to continue doing more with less in the short-term. Recently, the South African Reserve Bank (SARB) cautioned that the weakness of the rand and rising oil prices could lead to inflationary pressure. In addition, economists have warned of a possible rate hike before the end of this year as a way to further stabilise the local economy.
"In contrast to the challenging conditions faced by local tourism, South Africa should be able to sustain its international appeal as a tourist destination. Overall, we are well positioned to attract international travellers and the weakness of the rand will continue to play a big part in ensuring that South Africa remains an attractive destination," concludes Nyondo.
