The rise of the middle classes in emerging markets seems to be fueling growth in travel and tourism, a sector that is set for massive growth in the next decade despite various challenges.
Travel and tourism in the Southern African Development Community (SADC) made a direct contribution of US$19.2 billion (2.9%) to the world’s Gross Domestic Product (GDP) in 2013, and this contribution was due to reach 5% in 2014, representing about US$20 billion, according to a 2014 report published by the World Travel and Tourism Council (WTTC).
This direct contribution, which primarily reflects the economic activity generated by industries such as hotels, travel agents, airlines and other passenger transportation services, is set to rise to 5% each year between 2014 and 2024, and reach US$32.9 billion by 2024.
The report forecasts a decade of massive growth in every aspect of this sector worldwide, with SADC’s total contribution to the world GDP and total employment set to reach US$92 billion (down from US$55.3 billion in 2013) and 6.86 million jobs (down from 5.33 million in 2014) in 2024, respectively. SADC countries, which invested US$9.2 billion in 2013 to boost the sector, are expected to fork out US$12.9 billion over the next 10 years to help the sector stay afloat and make a significant impact on the world stage.
While the sector overall continues to perform well in other parts of Southern Africa, not everyone in this region of 270 million people is happy about the growth. The following two case studies can duly demonstrate that yesterday’s losers have become today’s winners.
South Africa’s tourism industry figures have been grim when compared to previous years, and even the country’s positive entrepreneurs operating in the sector are said to be finding their perennial optimism strained.
While the International Air Transport Association (IATA) revealed a 21% year-on-year decline in air ticket revenue for tickets bought to South Africa in July this year, Grant Thornton has estimated that South Africa would receive 100 000 fewer overseas tourists in 2015.
A research report by Tourism Business Council of South Africa (TBCSA) has suggested that the lower tourist numbers could result in as many as 9 300 jobs losses in the tourism industry and a total net loss to the country’s GDP of approximately R4.1 billion (about US$380 million) in 2015.
Business Partners Limited (BPL) Executive Director Gerrie van Biljon says new visa regulations issued by the South African government are the new barriers and a setback to the tourism industry.
“These effectively require many prospective visitors from countries such as China and India, to travel hundreds of kilometres in their own countries to one of the isolated offices that handle South African visa applications,” van Biljon explains.
In Namibia, where tourism constitutes the third largest contributor to GDP after mining and fisheries and agriculture, 1.176 million international tourists in 2013 were hosted, from a mere 272 000 in 1995, according to with the World Tourism Organisation’s Yearbook of Tourism Statistics.
However, international tourism’s monetary value (receipts), which reached US$560 million in 2010 (from US$511 million in 2009) and went up to US$645 million in 2011, unbelievably decreased to US$598 million in 2012 and further fell to US$524 million in 2013.
Nevertheless, some critics said the rise of the tourism in Namibia means nothing as long as the mass of tourism enterprises, the group of small firms continue to be marginalised in policy processes.
“The mass of Namibian SMEs have limited marketing and funding capacity which makes it difficult for them to compete with larger enterprises, and this inequality in power also extends to the inability of SMEs to influence the process of policy formulation,” E Nyakunu and Prof CM Rogerson, of the School of Tourism and Hospitality at the University of Johannesburg, wrote on Tourism policy analysis: the case of post-independence Namibia.
SADC, which regrets that tourism in the region has not received appropriate attention from governments, openly admitted that governments have not prioritised or budgeted for development of the industry.
Perhaps bearing in mind that previous tourism strategies for the region have proved unsuccessful, lacking effective marketing initiatives or prioritising areas at odds with SADC’s overall objectives, and that few investment incentives and disparate policies have created barriers to cross-border travel, the organisation launched the Protocol on the Development of Tourism in 1998.
SADC Protocol on the Development of Tourism
The aim, SADC said, was to establish tourism as a priority for Southern Africa and sets out its intention to use it as a vehicle for sustainable development.
This Protocol urges Member States to improve their quality of service, safety standards and physical infrastructure as a means of attracting tourism and investment into the region.
Therefore, the Protocol encourages cooperation between governments and private developers through a favourable investment climate that promotes sustainable tourism, preserving the region’s natural and cultural resources.
In terms of infrastructure, some Member States have already responded to this call.
For instance, a 33km Sani Pass gravel twisting road between South Africa and Lesotho is currently being asphalted to act as a magnet to boost visitor numbers in these two countries.
Mpaiphele Maqutu, Lesotho Tourism Development Corporation CEO, said once completed in 2016, the road would act as an attraction to a broader base of tourists and bring new prosperity and economic development to the kingdom.
“This project will bring to life what was envisaged when the South African and Lesotho governments agreed that tarring the road made sense-both from an environmental and economic viewpoint,” Maqutu said.
The project’s cost is estimated at R887 million.
Hope at the end of the tunnel?
Despite the region’s industry facing several challenges and going through rough paths, WTTC forecasts about the next decade offer some hope and instill some impetus among the region’s tourism players.
Industry watchers have urged companies, especially SMEs, to start innovating if they want to continue operating.
BPL’s van Biljon said: “Tourism entrepreneurs should use any lull in the business to rethink and rework their product offering, costs and marketing so that they are ready when the tide turns, as it always does.”
He added: “Tourism businesses that had been focusing on international tourists need to work on providing enticing packages for the local market to fill as many beds and seats as possible if the international tourists aren’t coming in the numbers that they used to.”
As if desperate times call for desperate measures, the Namibian government has called for collective and innovative actions to continue to sustain tourism in the country.
It also urged companies to develop new customer segments and new markets when traditional source markets are in troubled times. τ