Cape Town – A dramatic decline in foreign tourists will have far-reaching implications for SA, including job losses, warns an expert.
Recent figures released by Statistics SA for the first quarter of 2015 show South African tourism is in crisis, with a 6% drop in total foreign tourist arrivals.
“A loss of this magnitude in foreign tourist arrivals is unprecedented. We have never seen such dire levels of decline in the last 21 years of our tourism history,” said Lee-Anne Bac, director, advisory services at Grant Thornton.
“There will most definitely also be job losses especially in niche tourism operators that focus on specific foreign tourism markets, i e China and India,” said Bac.
Other far-reaching implications resulting from this dramatic decline include a price squeeze as tourism product owners fight for a shrinking foreign tourism market and a price sensitive domestic market.
Bac said that during the first quarter of 2009, when the world was in deep recession, South Africa recorded a 2.5% drop in tourist arrivals. “When comparing our recessional years to our current situation, it’s a big shock.”
South Africa has rarely experienced any decline in tourism arrivals since 1994. Small declines were recorded in the first quarter of 2004 (-0.8%), and arrivals slipped 0.6% during the first three months of 2001.
“Based on global tourism forecasts for 2015, South Africa should not be experiencing these levels of decline,” said Bac. “South Africa appears to be bucking the global trend at the moment.”
What makes it even worse is that the decline happened at a time when the weak rand should have encouraged foreign tourism. Direct spend lost to the SA economy because of the tourist tumble is estimated at R1.6bn, which excludes the levels of growth South Africa should have experienced during the same period.
“If we had experienced modest growth of 5% for the quarter, then the total number of foreign tourist arrivals to end March 2015 would have been 2.6 million. So, if we include the expected growth expectations in our estimations, South Africa actually lost 265 000 foreign tourists (and not 150 000) in the first three months of the year.”
This means the loss of foreign direct investment would have been R2.8bn, according to Bac.
Factors deterring tourists from travelling to SA include the Ebola pandemic in West Africa, economic decline in some source countries and implementation of confusing new visa regulations.
For the first quarter of 2015, there was a decline in foreign tourist arrivals from the majority of overseas markets to South Africa. Tourist arrivals from the UK bucked the overall trend, showing an increase of 5% for the quarter.
Overall, tourist arrivals from overseas markets declined by 6.8% during the first quarter of 2015 according to Stats SA data, with big drops recorded from Russia (down 47%) and Brazil (down 34%).
China is down 38%, even though the first quarter includes the Chinese New Year which is a time when the Chinese normally travel extensively, while India showed a 13% decline.
Tourist arrivals from Africa dropped 5.6% in total with significant declines from Nigeria (down 15%) and Uganda (down 19%).
The xenophobic attacks which flared up in SA towards the end of the first quarter are not to blame, said Bac, since they did not form part of the period under review. However, new regulations requiring foreign tourists who need visas to appear in person and submit biometric data most definitely played a part.
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UBER Technologies taxi drivers in Cape Town are suffering xenophobic discrimination from traffic police and face lengthy waiting times for licence approvals, according to a spokeswoman for the US company.
“Many of our partner drivers say they have been stopped by law enforcement officers who first determine the driver is not originally from SA,” said Samantha Allenberg, a spokeswoman for Uber Africa. They “then start demanding to see the Uber application on their smartphone”, she said.
Earlier this year SA suffered its worst outbreak of xenophobic attacks since 2008, when seven people were killed. The violence took place in Johannesburg and Durban, both of which have Uber drivers.
Some poor South Africans see foreigners, mainly from other African countries, as competitors for jobs in a country with a 26% unemployment rate.
“It was one Uber driver who made the claim against one traffic official,” Cape Town safety and security councillor JP Smith said. “We have taken the officer off the road pending further investigation.”
Uber is “pleased the authorities have taken action”, Ms Allenberg said. “We still say many of our driver partners are targeted first for their nationality.”
Founded in 2009, San Francisco-based Uber connects drivers with passengers via mobile applications in more than 300 cities.
The company, which does not own the vehicles or employ the drivers, has taken business from existing taxi companies and was the subject of protests in Cape Town in January. Uber is loss-making but is valued at about $50bn as it enters new cities and tests new features such as food delivery.
Uber drivers had taken passengers on more than 2-million journeys in SA this year, compared with about 1-million last year, Ms Allenberg said.
Johannesburg is considering regulating the service after complaints from taxi drivers in the city.
Securing provincial vehicle operating permits had also been a challenge for Cape Town’s Uber drivers, with some taking more than six months to process, Ms Allenberg said. The company was expecting to hear the outcome of 143 out of 350 outstanding applications to the Western Cape provincial government on July 10, and a further 800 were awaiting approval by the City of Cape Town, she said.
Uber vehicles in Cape Town must be registered as metered taxis, according to the Western Cape provincial government. Traffic officials have impounded more than 200 Uber cars in the city this year for not having the right permits. Cape Town had impounded 4,000 taxis over the past 16 months, so the number of Uber vehicles was negligible, Mr Smith said.
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