Cape Town - The dust appears to be settling somewhat following the “Brexit” shock of last week, but the aftershocks are far from over as many South Africans and travellers across the globe wonder how it effects the industry going forward.
Tourism Business Council of South Africa's CEO Mmatšatši Ramawela says it's very much a wait-and-see game when it comes to Brexit - but South Africa can most-likely expect it to affect the 2017 summer season in the short term.
Ramawela says beyond that it is way too early to tell as "things are currently in a state of flux".
"But I do think travel is one of the things that many people who are feeling the 30-year slump of the pound will be thinking twice about. People will start becoming very careful with what they do with their money and a lot of people will more than likely be rethinking their plans for the 2017 summer period.”
Ramawela says while it might affect the upcoming summer season, the impact is "not expected to be massive".
SEE: #Brexit: How will the crashing pound affect SA travellers?
“Think about it, if people have not paid for their package already, they might not cancel but they may consider changing to shorter stays, perhaps not taking multi-generational holidays together as their money is not going as far as what it would have."
Ramawela also says businesses should not be blind to the fact that one of South Africa’s key source markets might now consider taking holidays or breaks closer to home, and that SA should expect competition from the likes of Italy or Malta going forward.
While the long-term effects are very much in flux, Ramawela says the industry will now have to focus "more time and energy on convincing the market that South Africa is still a good-value destination".
“We will all literally need to work harder now to convince travellers to come to SA and it is very much a wait-and-see-game as Britain decides what its forward path is.”
While some experts forecast that the pound could drop to below the euro, others remain optimistic about the effects of the currency fluctuations.
'SA a highly favourable for international visitors'
Cape Town Tourism CEO Enver Duminy said in response to the Brexit decision, the rand/pound exchange rates "still makes SA a highly favourable prospect for international visitors as it means affordable luxury".
It is hoped that the 'shock' will be short lived as the process to exit will take about two years, with Duminy saying “in the medium term, tourists and tourism businesses will need to prepare themselves for a series of changes”.
“We would caution against tourism businesses raising their prices to gain from international visitors only to price locals out of the market, especially since locals may opt to travel domestically within SA as a result of unsteady exchange rates,” Duminy says.
“Those international visitors who have booked well in advance will be able to enjoy their visit to the Mother City, and we will continue to showcase all that the city has to offer as a world-class travel destination,” says Duminy.
Will the UK become a better value travel option for South Africans?
Flight search and travel deals platform cheapflights.co.za has provided some insight into what South Africans can expect to see over the next few months. In the immediate aftermath of the Brexit announcement, the falling value of the pound has meant that the UK has suddenly become a better value destination for South Africans.
Andrew Shelton, Managing Director of cheapflights.co.za says, “Last Friday’s EU Referendum result may have sparked a Brexit Boom for UK inbound tourism, as travellers around the world adjust to the fact that the UK has suddenly become much better value for money as the pound struggles. In the few days since Brits voted to Brexit, flight searches for travel into the UK have shot up from most countries.”
Travellers decide to sit and wait
With the rand continuing to show losses as a result of a volatile market caused by the Brexit vote, however, South Africans are holding tight on making big travel decisions for the meantime.
“Despite the devalued pound making the UK a better travel option for South Africans, we have actually seen a slight decrease (3%) in flight searches from South Africans since the vote last week, suggesting that travellers are holding tight until the dust settles. This may be due to the general sense of uncertainty now, or have a more direct correlation to violent currency fluctuations,” explained Shelton.
This trend is mirrored in the UK, which will likely effect the South Africa tourism industry too.
“The UK is by far the leading market for tourism into South Africa, so any changes to UK holidaymakers’ behaviour will have a knock-on effect in South Africa too,” said Shelton.
“In the UK, the release of pent up holiday demand many expected to happen over the past weekend didn’t materialise, with holidaymakers in the main choosing to ‘sit and wait’ before they book. Londoners in particular seem most downcast, with searches for flights out of the capital actually declining year on year”
SEE: Brexit vote clouds horizon for British airlines
Several factors are likely to contribute to higher airfares. Low-cost carriers within the European Union – such as Ryanair and Easyjet - have warned that jet fuel prices, linked to the dollar, may increase as the carriers lose their ability to operate freely within the open European aviation market. In the short term, the volatile pound is also effecting airfares.
“We’ve seen a 7% increase in airfare prices from South Africa into the UK since the referendum result was announced on Friday, and this is likely to continue until there is some stability in both the UK and South African economies. For now, we can expect prices to rise, so we would suggest that if travellers see a good deal, they grab it quickly as it may not be around for long,” said Shelton.
No change in visas
Until negotiations between the European Union and the UK on the relationship moving forward are completed – which is likely to only be in 2018 – there are no changes to current visa laws. South African should continue to factor in visa applications and costs for travel to UK and within the European Union for the time being.
“It’s a mixed message for the travel industry at the moment, and travellers in general. There are undoubtedly still some great deals to be found on flights, but while the weakening pound is good news for South Africans travelling to the UK, a widespread sense of uncertainty is giving holidaymakers worldwide a pause for thought before they book,” finished Shelton.
What to read next on Traveller24:
- Solo travelling the Indian Ocean islands