How to boost tourism in SA If tourism is vi­tal to our econ­omy, what are the is­sues we need to ad­dress in or­der to draw max­i­mum ben­e­fits from this industry? And, no, host­ing mega-events is not the an­swer.

Finweek English Edition - - OPINION - Ed­i­to­rial@fin­ is as­so­ci­ate pro­fes­sor in eco­nom­ics at Stel­len­bosch Univer­sity.

the op­ti­mism after the 2010 World Cup has given way to pes­simism fol­low­ing the visa reg­u­la­tions saga that did noth­ing but hurt the lo­cal tourism industry. A rough cal­cu­la­tion on re­cently re­leased tourism num­bers sug­gests that the ad­di­tional rise in tourism num­bers from the World Cup was com­pletely nul­li­fied by the new visa reg­u­la­tions. (That blow has now been soft­ened by changes to the reg­u­la­tions.)

Tourism is vi­tal to our econ­omy for at least two rea­sons: It’s labour-in­ten­sive, and this labour is of­ten fe­male and un­skilled. For roughly ev­ery nine tourists that visit South Africa, one job is cre­ated. More im­por­tantly, its im­pact is spa­tially dis­persed. Labour-in­ten­sive man­u­fac­tur­ing is al­most al­ways con­cen­trated in large met­ro­pol­i­tan ar­eas. Tourists travel to Cape Town, but also to Clarence, Clan­william and Cof­fee Bay.

In a research pa­per pub­lished in Lo­cal Econ­omy, Gareth But­ler and Chris­tian Roger­son re­port the re­sults of in­ter­views with black em­ploy­ees of tourism es­tab­lish­ments in Dull­stroom, known for its fly-fish­ing and agribusi­ness. The au­thors find that when most em­ploy­ees are re­cruited, they have lit­tle more than a high school cer­tifi­cate, but gain valu­able skills through on-the-job train­ing (mostly im­prov­ing their com­puter lit­er­acy) or, for some, through more for­mal ter­tiary qual­i­fi­ca­tions, in­clud­ing univer­sity de­grees paid for by the em­ploy­ers. In short, the sec­tor pro­vides op­por­tu­ni­ties in ar­eas where there are few al­ter­na­tive in­come sources.

What can be done to in­crease the num­bers of tourists vis­it­ing SA? The most ob­vi­ous an­swer is: make it as easy as pos­si­ble for for­eign­ers to tem­po­rar­ily en­ter our coun­try. Enough has been writ­ten about the ab­surd visa reg­u­la­tions. But let me add: in an at­tempt to pre­vent child traf­fick­ing, the reg­u­la­tions have hurt far more South African chil­dren by re­duc­ing the in­come (pos­si­bil­i­ties) of their moth­ers, who would have found work in the tourism industry had more tourists en­tered. Mak­ing it easy for tourists also in­cludes bet­ter and af­ford­able trans­port to the coun­try. More flights might re­quire com­pet­i­tive air­port land­ing slots. So would ef­fi­cient and safe bor­der posts. And once here, al­low them to use ser­vices they trust, like Uber taxis and Airbnb ac­com­mo­da­tion (with the up­shot of even more dis­persed ben­e­fi­cia­ries).

Ad­ver­tis­ing can help. Many coun­tries try to boost their international im­age, for ex­am­ple, by host­ing events. We did this with the 2010 World Cup and will again in 2022 with the Com­mon­wealth Games. The tourism in­creases from the World Cup, as María San­tana-Gal­lego and I show in a pa­per, were large and con­tin­ued for a few years after the event. But a new pa­per in the Jour­nal of Eco­nomic Per­spec­tives by two gu­rus of sports eco­nom­ics, Robert Baade and Vic­tor Mathe­son, warns against host­ing mega-events. They find that “in most cases the Olympics are a money-los­ing propo­si­tion for host cities; they re­sult in pos­i­tive net ben­e­fits only un­der very spe­cific and un­usual cir­cum­stances”. The cost­ben­e­fit propo­si­tion is also worse for cities in de­vel­op­ing coun­tries, they say. Ouch. Those who dream of a Dur­ban, Jo­han­nes­burg or Cape Town Olympics take note.

Industry sup­port, as with other sec­tors, seems to be of lit­tle help; of­ten, the best gov­ern­ments can do for ex­ports (tourism is for­mally known as travel ser­vice ex­ports) is to en­sure a safe and open busi­ness en­vi­ron­ment. One of the first re­ac­tions to the Paris at­tacks in November last year, for ex­am­ple, was the fear that ter­ror­ism will harm France’s mas­sive tourism industry. Paris was the world’s third-most-vis­ited city in 2015. France re­mains, by a large mar­gin, the world’s most-vis­ited coun­try. Travel and tourism ser­vices con­trib­ute 9.1% to its GDP (SA is slightly higher at 9.4%, but sig­nif­i­cantly below New Zealand, for ex­am­ple, at 17.4%).

The fear seems jus­ti­fied: of course tourists would pre­fer to travel to places where they are less likely to be killed, mugged, or even re­quired to pay a bribe. And in a re­cent work­ing pa­per, I (with two Span­ish co-au­thors) find ex­actly that: a 1% in­crease in the ra­tio of ter­ror­ist at­tacks per 10 000 in­hab­i­tants re­duces tourist ar­rivals by 2.3%. We find that the ef­fects of ter­ror­ism and crime are greater for leisure tourism than for busi­ness tourism but that cor­rup­tion af­fects only busi­ness tourism.

Safety and se­cu­rity re­mains a cen­tral con­cern when trav­el­ling to SA. Even though the sta­tis­tics show that tourists are safe, the per­cep­tion of safety is what mat­ters most. (Con­sider the ac­tual ver­sus per­ceived threat of Ebola.)

The good news is that we also find that tourists from more un­sta­ble coun­tries are more tol­er­ant of ter­ror­ism, crime and cor­rup­tion in the des­ti­na­tion coun­try. The rapidly ex­pand­ing mid­dle classes of China and es­pe­cially In­dia (cricket!) of­fer ex­cel­lent op­por­tu­ni­ties for our tourism industry; on ag­gre­gate, the per­cep­tion of crime and cor­rup­tion, the sta­tis­tics show, will have less of an ef­fect on their de­ci­sion to travel.

SA has many won­ders to de­light leisure and busi­ness tourists. Let’s wel­come them with open bor­ders and con­ve­nient reg­u­la­tions. And if you’re in the tourism industry, per­haps it’s good to shift focus to new mar­kets where per­cep­tions of safety and se­cu­rity are less likely to play a de­cid­ing role.

For roughly ev­ery nine tourists that visit South Africa, one job is cre­ated.

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