Africa Travel Week

ATW Podcast

Rethinking tourism: Planning to deal with uncertainty

Many of us can relate to the stop-start cycle that the travel and tourism industry has been caught up in over the past year. Just when we see the first green shoots indicating a turnaround, we are slammed by an unexpected blow or hit by a curveball that we never saw coming. The result, says experts from BDO, is that we have had to become resilient, and learn how to think on our feet, reshaping our businesses.

In an Africa Travel Week Virtual session entitled, “Rethinking tourism: Planning to deal with uncertainty’, Christelle Grohmann, Director: Advisory Services at BDO says we can’t just go back to how it was, we need to rethink strategies, structures, how we do business, our markets and products so that we can embed some resilience and get beyond the “decision inertia” that has plagued so many of us.

An important step in this process is looking closely at the data and analytics that allow you to make better decisions. Lee-Ann Bac, Director: Advisory Services at BDO, spent some time in the session going through the data available on confirmed cases in South Africa, which demonstrate that we have actually handled the pandemic very well – in fact, far better than many of our source market countries like the USA, UK and parts of Europe.

On the other hand, she looked at the data for vaccine roll-out, where we can see that Africa is lagging far behind the rest of the world. “Leading the way are the UK, UAE, Israel, the USA and Chile,” she says, pointing out that the situation in Africa is going to be a big problem for South Africa. “Source markets are looking for reassurance – not only do they want to be vaccinated, but they want the host countries to be vaccinated too, so we have to consider the rest of Africa.”

Unpacking the tourism data even further, Bac looked at the foreign arrivals to South Africa, pointing out that the destination had not gained huge ground in terms of growing foreign tourism over the last 10 years. “From 2020, we have grown at an average compound growth rate of 3% which is really lacklustre compared to global growth which is between 4% and 5%. This is mostly due to own goals,” she says, citing the unabridged birth certificate debacle, visa regulations, safety issues and the water crisis as factors the caused the disappointing performance of the sector. “We need to make sure that as a sector we work better and more forcefully with government to overcome these challenges,” she adds

Looking at the 69% decrease in foreign arrivals in 2020, with some recovery in December, the best performing markets were Russia, Ghana and the UAE, while the worst-hit were Italy, Netherlands, France, China and India. “How do we recoup these losses,” she asks? “We have had to rely on the domestic market which for many, but not everybody, has been the saviour.” She emphasises the importance of not ignoring this market in the future, as many of the best performing destinations in the world rely on a robust domestic market, with international travel acting as the “cherry on top”.

Tackling the all-important question of when tourism will return, Bac forecasts that overall, 2021 will be worse than 2020 and that we should not expect a return to normal tourism levels by December because the return of foreign tourists is very dependent on vaccination roll-out. She predicts that we will only return to 2019 levels in 2024. However, there are certain market segments that are more important to focus on from a recovery perspective, to avoid the stop-start that we have had for the past year.

Amongst these segments is leisure and VFR. Bac explains: “For this segment the decision to travel is an individual one and the need to see friends and family is high – as well as to just go on holiday for relaxation.” On the other hand, while an important segment, business travel has certainly slowed, largely due to the popularity of online communications eliminating the need for in-person meetings. The recovery of MICE travel will be crucial, which Bac points out has been extremely hard hit due to mass gatherings being seen as “super spreader events”. “I do believe the MICE industry has proved that we can host in-person events successfully. With the roll-out of rapid testing, I can’t see why we shouldn’t have people getting together for conferences and even big events,” she adds.

Another important segment is youth travel. Jabulani Dededu, Senior Consultant: Advisory Services at BDO says this segment is the least risk adverse and most commonly affected by what we know as “cabin fever”. These travellers are happy to take the calculated risk and travel to tourism and hospitality products – and also to pursue outdoor activities, he adds.

Finally, taking a closer look at the future of intermediaries, Bac says we can expect to see a questioning of their role and should expect a squeeze on their fees. “Intermediaries have to be really focused on their unique selling points and what they are delivering and should consider new ways of paying and working. Just because you did things one way in the past doesn’t mean it will stay that way going forward,” she concludes.

Africa Travel Week

Africa Travel Week (ATW) focuses on inbound and outbound markets for general leisure tourism, luxury travel, LGBTQ+ travel and the MICE/business travel sector as well as travel technology. Shows include: ILTM Africa, WTM Africa, EQUAL Africa, ibtm AFRICA, Travel Forward, Sports & Events Tourism Exchange and African Tourism Investment Summit.