Despite challenges, African tourism is on the rise
THE “AFRICA rising” narrative might have become more complex recently, and taken a few knocks, but there’s no doubt the continent is open for business where hotel development and tourism is concerned.
The strengthening of the rand to the pound and the dollar is unlikely to deter visitors to South Africa. Initial fears that Brexit would stop Europeans from making long-haul trips have proved wrong.
That all 10 of the leading markets for tourists to South Africa have shown big increases in the number of visitors, according to Stats South Africa’s latest tourism and migration report, is good news. It reported that the number of tourists rose by 14 percent from 731 248 in August last year to 833 638 in August this year. The number of overseas tourists increased by 22.6 percent over the same period.
Tourists from the UK, the US, Germany, the Netherlands, France, China, Italy, Australia, India and Spain (that showed a 51.5 percent rise in numbers to South Africa) comprised 75.2 percent of all tourists from overseas. That the UK had the smallest rise, with 10 percent, is probably due to the nervousness around Brexit.
Over the past few months we have highlighted how important it was for the South African government to change its draconian visa requirements, especially for Chinese visitors, and are delighted that with conditions eased, there has been a 66 percent year-on-year rise in the number of visitors to South Africa from China.
The South African visa regulations definitely caused problems that cost the country a small fortune. We have had clients from India, with the visas in their passports, having to wait four hours at OR Tambo; there were on average 11 people not allowed to board each flight from the UK to South Africa last summer and with the new regulations in China, the number of visitors to South Africa fell 40 percent.
However fantastic the destination may be, if you can’t get there, tourists won’t come. South Africa has so much to offer leisure and business tourists, but if it is easier to enter Kenya for a safari (which it now is) then potential travellers will choose Kenya over South Africa. Trump effect Looking ahead, and putting aside his influence on the US, how will a Donald Trump presidency impact on tourism in Africa?
Investors like certainty and as his will be a unique style of leadership, there is likely to be short-term uncertainty. This may well deter tourists from taking longhaul trips and, as such, the number of high-spending US guests may fall. In the longer term, if he sticks with the policy of tax cuts he mentioned during his campaign, that could well increase the number of potential US visitors to the continent.
The big hotel brands are demonstrating their confidence in the future of tourism in Africa. Rezidor announced at the recent Thinc Africa Conference that it was on track to have 23 000 new rooms across the continent by 2020. It is opening five new hotels in Angola in the next 18 months.
Thinc Africa also saw Marriott acknowledge the need for more hotels in Cape Town and it has announced the development of a 189-bedroom AC Hotel at The Yacht Club, Roggebaai as well as a 200-bedroom Marriott Hotel and a 150-bedroom Residence Inn by Marriott at Culemborg, which will be re-named Harbour Arch.
Tinley Manor, located on the KwaZuluNatal North Coast, will be developed to create a world class beach resort destination, close to the King Shaka International Airport and only two hours from Big 5 game reserves. Two operators are close to agreeing terms and the developers are currently looking for investor partners.
While tour operators are cancelling trips to Ethiopia, where the tourism industry is under serious threat due to political unrest, there are other markets in Africa that are now opening up and starting to develop their tourism potential.
There are several countries in Africa without any branded hotels. This is now starting to change, which is good news for Africa generally, as we are moving away from the typical 10 markets that everyone goes to and talks about.
Eritrea has huge tourism potential and HVS has been commissioned to prepare a feasibility study for Eritrea’s first internationally branded hotel. With strong demand from commercial travellers and diaspora, and the potential to develop a prosperous tourism industry in this undiscovered country, the prospects for the hotel industry are exciting.
Currently tourism to Eritrea is mainly around mining and business, but the future of tourism there will be leisure based. It offers beautiful Red Sea islands and great diving locations. Inaccessibility is still a problem and US-led sanctions will need to be dropped, but the potential exists and is starting to develop.
The Mozambique Tourism Authority sent delegates to Thinc Africa in Cape Town this year, after which they invited me to speak in Maputo. Their government is now focused on tourism development. Mozambique is a popular destination for South Africans, although accessibility is an issue. It has stunning beaches with warm water and great diving. Accessibility The accessibility issue is a chicken and egg situation – hotel brands need to be there to convince the government that it’s worth spending the money, but the government needs to spend the money to convince them to come there.
While tourism to Nigeria has fallen dramatically, Ghana recently introduced a policy of lower tax on aircraft fuel to incentivise long-haul flights to refuel in Accra. SAA and Ethiopian airlines are now stopping there to refuel on their way to the US and business tourism to Ghana is on the increase.
Tourism in Kenya is due to be the second-largest producer of foreign revenue this year. There have been no reports of violence around the presidential election next year, which bodes well.
If the elections in Ghana and Kenya are peaceful, this will give business and the tourism industry the confidence to invest.
There is no shortage of opportunities and resources for development on the continent, but finding the right investor partners is crucial. I recently returned from the AHIF Rwanda (Africa Hotel Investment Forum) where I moderated two panel discussions.
The first was on understanding the criteria of development banks and the key message from this is they are open for business and ready to lend, but need partners who understand the hotel sector and have sufficient equity to invest and operate the hotel. The development banks have created knowledgeable teams that can identify good opportunities very quickly.
One of the challenges for African tourism is service quality. We are delighted that South Africa’s Tourism Department has committed to creating an enabling environment for skills transfer and capacity building. The language skills of South Africans give them a head start over some other African countries, which, coupled with training and service skills, will deliver a great customer experience.
This is why we are launching HVS Executive Search in Africa, to provide general managers and fill corporate positions in the hospitality industry across Africa.
Despite some short-term challenges, hoteliers of all sizes are continuing their expansion and the long-term climate for hotel development and investment remains sunny across Africa.
There is no shortage of opportunities and resources for development on the continent, but finding the right investor partners is crucial.
Tim Smith is the managing partner of HVS in Cape Town. HVS is the largest independent hotel consultancy with 40 offices across the globe.