The world is changing fast and to keep up you need local knowledge with global context.
The coronavirus that erupted in Wuhan, China and has spread across the globe, most recently bringing Italy to a standstill, will hit South Africa hard. According to Jabulani Debedu, a consultant at BDO’s tourism specialist unit, has tallied the costs of previous diseases that have knocked the tourism and travel industries in South Africa and cautions that the sector is likely to see a drop in visitors by anything from 7-15%. This follows a tough 2019, with fewer tourists travelling to SA from Africa and elsewhere. Nevertheless, avoid panic as this, too, shall pass, is the message in this interview with Alec Hogg, BizNews founder and editor-in-chief. – Jackie Cameron
Jabulani Debedu is here because he’s from BDO, good spokespeople when it comes to the whole tourism sector. It’s almost like an area that your firm is focused on.
It’s not a formal focus. I sit in the advisory division in my unit – the tourism specialist unit -we track and consult on tourism, so we’ve done a lot of work on statistics in particular but also, the development side. We do hotel feasibility studies, financial analysis, business cases for various infrastructure, and facilities.
And you know what’s going on in tourism right now and it doesn’t look very good.
Yes, the numbers are not good, I’m afraid. We looked at the South African tourism industry performance for 2019, specifically the international tourism arrivals – unfortunately declined by 2.3% last year – which is a loss of about 244,000 international tourists. When you look at the total foreign arrivals in South Africa, we divide that into overseas arrivals and tourists from the African continent. With regards to tourists from the African continent, they constitute about 74% of total foreign arrivals in South Africa, the overseas market constitutes 26%. The overseas market: what they lack in volume, they more than make up in the average spend per foreign tourist, which is fantastic but the African market – for South Africa – is also very important. They provide the volume. Just to go back to the numbers, the 244,000 drop in tourist numbers in 2019, we had 60,000 less tourists coming from the overseas market and about 185,000 less from the African continent.
Without getting bogged down in the numbers, what does it mean financially?
When you look at the 2.3% decline in tourist arrivals and compare it to the 4.2% average growth that Africa as a continent had and the global average of 4.7%, it effectively means South Africa lost 683,000 tourists.
And if you work on an average of R8,700 per tourist, it amounts to about R6bn direct spend to the economy.
We’re getting hit from every side, clearly.
Yes. This is a culmination of our behaviour going back to the past 9/10/12 years. We’re in a society that’s stagnating, if not going backwards and the solution obviously, is good individual integrity and societies that recognise that, and are pretty good around that succeed and societies that don’t, stagnate and we’re stagnating.
Coronavirus, Jabulani. How’s that going to impact us?
It’s still too early to tell but the indications are that it’s going to have a massive impact on South African and global tourism. Just by way of an example, the Ebola crisis of 2015 had a nett effect of reducing our tourist arrivals for that year by nearly 7%, so we estimate anything from 7-15% that we’re likely to lose.
Surely, that’s already there. Just with China not sending anybody or not allowing tourists to come to us; from your figures, it’s nearly 100,000 people who come from China every year. If they’re not coming, that’s already a dent.
It’s certainly a dent but luckily, China doesn’t constitute a significant portion of our overseas arrivals because when you look at the overseas arrival, which is roughly 2.6% per year – 60% of that is from Europe and the concern now in Europe is one of our major source regions. The concern with the spread, certainly Italy, France, Germany and to a lesser extent, the United Kingdom, is that it’s going to affect those countries that are a major source market.
So, your clients in tourism had just a little bit of breathing space with the change in the Visas. Now, they get knocked with coronavirus. If you’re in the tourism business, how do you actually get them to hang in there?
It’s tough but I think it’s important for people not to panic, to keep a sense of perspective. In the South African case and certainly in Africa it’s too early to put drastic measures because when you look at all the reported cases for example, all of them have been imported. We haven’t had local transmission yet. So, it’s important for us to keep a perspective. Treat guest/client enquiries on a case-by-case basis because you don’t want to put drastic measures only for it to have the nett effect of driving tourists away from not only your business but certainly the country.
I think it’s great advice and I think people are keeping us informed so we must just listen to the experts, hear what they have to say and follow what they say. I’m definitely not an expert in viruses, so I’m not going to have an opinion.
Well, fake news is making a very strong comeback unfortunately when it comes to coronavirus but as Jabulani’s been explaining to us; if you’re in the tourism sector, just hang in because this too shall pass.
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