Rising costs change how, not whether, South Africans travel

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JEREMY MAGGS: South Africans, and I guess this is good news, are still planning to travel this Easter, but they are doing it differently.

We are cutting costs; we’re shortening trips and increasingly choosing road travel over flights. Why? Well, as rising fuel prices and broader cost pressures bite into our budgets.

So the appetite to travel is still there but the way people are defining value is clearly shifting.

Let’s get a view on that from Enver Duminy, chief executive officer of Cape Town Tourism. Enver, a very warm welcome to you. The subtext here is that we’re not giving up travel, we’re simply adjusting our behaviour.

Do you think this is resilience or early signs of strain as a result of the increasing geopolitical tension around the world?

ENVER DUMINY: Well, Jeremy, that’s a very good question. I think from what we’ve seen in the survey is that it’s just a shift in travel behaviour. We are going into the Easter period.

Those we [interviewed] had, of course, indicated that they had already pre-purchased flights and accommodation, and so therefore they were honouring that, and of course, for them it’s not just a luxury, it’s also a well-deserved break, especially with what’s going on.

Cost of living pressure is a reality, and I think what they are doing is they are adapting their itinerary and their travel programme.

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In fact, some are saying they are going to be spending less on, let’s say, eating out or some other general activities, but they still intend to travel, while there are others who are saying, I want to stay a little bit longer, so I’m actually going to downscale in other areas.

So we do see that as a change in travel behaviour. The intent is still there, which is good.

Then when you speak to the operators on the ground, they said the bookings [remain] positive from a domestic perspective. So that [is] encouraging.

So we can see that overlap, whether it’s an indicator of the resilience and the pressure, I think that is something we are still watching at this stage.

We haven’t seen an indication that there’s anything to panic about.

But I think the longer the Middle East conflict continues, [there will be] rising pressure on fuel costs and, of course, on operating costs, and we know that food costs and all these other things will have a lag effect, and that will put pressure on the industry.

But in the conversations, again with some of our members and partners, they are trying their best to absorb that cost. But of course, the longer it continues, that pressure will have to give in at some stage and may even be passed on to the consumer.

JEREMY MAGGS: Which is going to make things more difficult for operators, and people in your position are going to have to rethink strategy and approach. How do you do that?

ENVER DUMINY: I think for us it’s about understanding what the change in travel behaviour is and, of course, adapting our products.

Affordability is a global issue, not just a local one. I think this is where smarter reviews of operating efficiencies, costs, margins and then not just pushing profitability at any cost.

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I think this is where both the visitor and the industry need to say, how do we ensure sustainability? We’re all going to have to give and take a little bit.

But I think that strategy is also how we market the destination, how we also ensure that there are so many things to do in a destination, whether that’s Cape Town, Joburg, Durban, that people can do on various budgets.

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I think this is where operators need to become a lot smarter, understand the shift in travel behaviour and then meet that requirement, whether it’s more flexible cancellation policies, additional value adds to an experience or even bundling certain things with an airline and with attractions so that they don’t have to duplicate spending on marketing.

I think that’s where an organisation like Cape Town Tourism comes in, is that because we’ve got certain marketing platforms, we can work with the industry and say, let’s package together smartly instead of doing it in silos. So those conversations are happening.

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But I think also what we are looking at is how do we add new products into the market, and that becomes a continuous thing, whether there was pressure on the domestic or international market, those are things we continue to do irrespective.

JEREMY MAGGS: Difficult, though, for businesses, if margins are being squeezed across the industry to adapt, as you’re suggesting, their approach and even product and service to more price-sensitive consumers.

ENVER DUMINY: Absolutely. I think that’s always the question for us is how long and how far. We can have all these strategies and tactics in place but, of course, tourism is a demand-led industry, and we are going to have to find ways to sustain that.

Even in the conversations we’re having with government and really looking at some of the benefits, some of the zoning, the costs, how do we all absorb something over the medium to long term, so that we can sustain the industry, ensure visitors still have a memorable experience, and are willing to part with their precious money.

Then, of course, to make sure that ultimately, we can all get through it.

Because that has been proven time and time again, whether it was the water crisis, Covid and so on, is that we remain resilient, but we need to do that in collaboration with communities, with the employees within the sector and of course, with the visitors and government.

JEREMY MAGGS: Difficult, of course, to remain resilient given that there are so many unknowns, particularly around something like the fuel price, and we really just don’t know where that’s going to go.

ENVER DUMINY: Absolutely. I think when there is uncertainty, that’s where it’s critical for the different partners to get together and have conversations and also share what the plans are.

I think also when we’re operating silos, we have these echo conversations within, let’s say, accommodation, within tourism, even with, let’s say, banking. But the critical thing is for us to get together and start sharing these ideas.

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In fact, that’s what we’ve been doing as Cape Town Tourism: engaging with different partners, different sectors, because we understand that tourism covers quite a few of those sectors and we’re all feeling the same pressures.

We don’t have to do it alone, and I think that’s the critical thing. But you’re right, the longer this happens … but we’ve also seen this before that travel demand shifts.

With what’s happening in the Middle East, of course, people are going to choose alternative destinations to go to. Airlines still have to fly. So I think everybody’s going to feel the pain.

The question is, to your point, is for how long, and in uncertainty, we need to have at least some forms of plans of action, and that’s what we are busy with.

Hopefully, the conflict can resolve itself quickly and some level of normalcy can start returning. But we don’t know, we don’t have a crystal ball and all we can do is continue to evaluate and adjust all our plans and programmes.

JEREMY MAGGS: Enver Duminy is the chief executive officer of Cape Town Tourism.