The domestic tourism market has come into sharp focus during the Covid-19 pandemic as the industry tries to navigate its survival through the biggest external shock to hit the industry in the past century. Domestic leisure tourism, in particular, has been touted as a potential saviour for those already operating in this market and a market opportunity for those who need to diversify into previously untapped markets. The Minister of Tourism, Mmamoloko Kubayi-Ngubane, recently added her support to the need for South African tourism businesses to relook at their business models and to find new ways to attract the domestic market. The National Tourism Sector Recovery Plan also emphasises the importance of domestic tourism.
According to South African Tourism (SAT), around 7.9 million domestic holiday trips were undertaken in South Africa in 2019, with the top destination for domestic leisure visits being KwaZulu-Natal (KZN) with 20% market share. Do the numbers support the idea that the domestic leisure market is helping to keep tourism businesses open in KZN and what can be done to grow this market? Is there any positive news on tourism performance in KZN?
Bernadine Galliver from BDO’s Specialist Tourism and Hospitality Unit explores some of the answers to these questions.
A Disappointing 2020 Festive Season
In 2020, the lowest level of national lockdown commenced in September when the country was put onto Level 1. Prior to this, domestic leisure tourism had been (somewhat) open since late July 2020 but market demand was very subdued due to restrictions on inter-provincial travel, interruptions to school holidays, fears over travel due to the Corona-virus and economic hardships. The KZN tourism industry was looking forward to the 2020 Festive Season as an opportunity for recovery following months of harsh restrictions and weak demand.
Unfortunately, the second wave in December 2020 and subsequent increase to lockdown Level 3 (Adjusted) effectively ended the Festive Season boon and resulted in the worst tourism performance for Durban in the past decade. Beach closures, bans on events and gatherings and the sale of alcohol drove visitors away from KZN’s coastal playground. The result was a Festive Season occupancy of 55%, a significant decrease from the usual 75-80%. Additionally, data from AirDNA showed that occupancies on the North and South Coast were also hard hit, averaging at only 45%.
In the first quarter of 2021, weak tourism performance continued in KZN as South Africans went back to routine and the festive season ended.
It is not all bad news, however. Weekends and the recent spate of long weekends have brought some relief and there are positive signs that domestic leisure is indeed helping to buoy tourism in KZN.
Domestic Leisure and Weekend Travel – The Good News
BDO has been tracking occupancy levels in KZN using data from AirDNA. The long weekend in March 2021 showed an uptick in demand from the domestic leisure market. Occupancies over the long weekend peaked at an average of 71% in the central and northern Drakensberg, while the southern Drakensberg and North Coast (which includes towns such as Ballito) saw occupancies of around 60% and Durban of around 52% (Durban includes uMhlanga and Emdloti).
This boost to tourism in these regions is obvious when comparing the long weekend occupancies to those for the full month of March. For example, March occupancies in the central and northern Drakensberg and on the North Coast were in the low to mid-30s for the month.
The positive impact of weekend demand continued into April.
Whilst the Easter weekend in early April saw occupancies in the central and northern Drakensberg reach the low 70s again, while the southern Drakensberg, South Coast, North Coast and Durban all averaged in the low 60s. Notably, occupancies in the central and northern Drakensberg averaged at 80% and the southern Drakensberg at 70% for the Saturday and Sunday nights over the Easter weekend. There has been a temporary shift in demand from the coastal regions of KZN to the Drakensberg, but leading up to the Easter weekend, demand for the coastal regions increased daily as concerns over beach bans proved to be unfounded. Overall, the Easter weekend occupancy across KZN averaged 50%, up from the 46% achieved over the March long weekend.
This Freedom Day Long Weekend in April also drove up occupancies in the province, with the average being close to 70% in the Drakensberg and the North Coast, and 60% in Durban. Outside of these long weekends, normal weekend occupancies have been consistently higher than weekday occupancies throughout April, showing that the domestic leisure market is keen to travel.
How to Encourage Domestic Leisure Travel?
Research conducted by BDO on the domestic market confirms that fears about Covid-19 and financial difficulties are the top two main reasons for not travelling. However, there is a strong desire to travel for the remainder of 2021 with almost 80% of surveyed Gauteng consumers indicating that they plan to travel this year, and most plan to travel on weekends or during school holidays.
The top ways that these consumers can be convinced to travel are to address their concerns over Covid-19 and provide affordable travel deals. Destinations and tourism products in particular need to assure visitors that they are safe and that protocols for hygiene and social distancing are being followed. Certification of tourism safety is one of the ways that potential visitors can be assured that the risks around Covid-19 are being managed. The Tourism Business Council of South Africa (TBCSA) and Durban Tourism, for example, have both put in place tourism safety certification processes – these need to be included in marketing campaigns so that consumers are aware of the extraordinary lengths the industry is going to in order to safeguard travellers.
Secondly, domestic leisure travellers are looking for deals. There is a lot of price sensitivity in the market at the moment and travellers are looking for affordable packages which combine travel, accommodation and a bundle of leisure activities and entertainment. The keyword is ‘discount’ – domestic leisure travellers want discounts on entrance fees to attractions, meals and activities. They want to have fun on a budget.
The upcoming July school holidays are just around the corner and the time is now for destinations and product owners to come together to formulate and market packages to the domestic leisure market. The reality is that no one knows when business travel, conferencing, and events will return to normal so domestic leisure will remain key to the survival of the tourism industry for at least the remainder of 2021.
We believe that the domestic leisure market should remain a key priority even when business travel and conferencing returns beyond 2021. The leisure market is sizable and diverse enough to select appropriate segments that suit the individual product offerings that KZN has. Tourism businesses do not need to use a ‘spray-and-pray’ approach to attract this market. Be selective, be bold and innovate wherever possible to ensure long-term resilience and sustainability.