Could a weaker rand sustain growth in the travel and tourism sector?

FNB Business
FNB Business

In the midst of varied opinions on the cause-and-effect of a weaker rand, South Africa is now facing a tough task of sustaining growth in the travel and tourism sector following the major growth spurt reported by the TBCSA/FNB Tourism Business Index for the last quarter of 2013.

The Index revealed that tourism growth during the last quarter of 2013 exceeded expectations by reaching 114,6 points compared to a forecast of 110,8.

Wiza Nyondo, head of tourism at FNB Business said: “The recent growth is a great boost for South Africa because the travel and tourism sector remains a fundamental pillar of the South African economy. In the short term, the weaker rand will have a positive impact for the inbound tourism by making this destination competitive against our competitor holiday spots. However, in the medium to longer term, it is undeniable that the negative side effects of the depreciation could erode these gains through, inter alia, increased fuel costs and food prices in the economy.”

While it can be argued that a weaker rand might be beneficial for the tourism sector, Mr Nyondo cautions that the country cannot afford to solely rely on the strength or weakness of its currency to sustain growth.

“South Africa remains an attractive destination because of unique product offerings not found elsewhere, as marketed by SA Tourism (SAT). SAT has an ongoing strategy to enhance South Africa’s position as the business travel destination of choice to increase sustainable growth in domestic tourism,” Mr Nyondo said.

“Despite the obvious headwinds that the sector faces, we remain optimistic of the outlook of growth in travel and tourism in the country, which will be made possible by improving the economy, positive investor sentiment, and continued effective private-public sector partnerships,” Mr Nyondo concluded.