The United Kingdom’s withdrawal from the European Union after a close vote by its citizens could hurt travel from the UK to South Africa. The pound took a knock after the vote was announced, and some analysts have warned that the UK economy will be weakened by the move.
David Frost, Satsa CEO, expressed concern, pointing out that the UK is the South Africa’s largest overseas source market for tourism. “From that point of view, I don’t think it’s good news for us,” he said, adding that while the impact of the move remains to be seen, it’s unlikely to be good.
Economist Dr Roelof Botha said the Brexit move would undoubtedly have an effect on tourism, warning that a devalued pound would be detrimental to tourist arrivals from the UK. “Even though the rand has also taken a knock, which is usually good for tourism, the pound has depreciated by a substantially larger degree,” he said. Like Frost, he points out that the UK is SA’s biggest source market.
Botha said there was a silver lining in that the euro was stronger to the rand, which could encourage more tourism from other European countries.
The rate of exchange is also the key concern raised by tour operators. Suzanne Benadie, Sales and Marketing Director at Your Africa, says the effect of Brexit on tourism to South Africa will hinge on the value of the pound. She pointed out that the UK has enjoyed a favourable exchange rate against the rand, which has had a positive effect on buying patterns, with UK travellers booking longer holidays to SA and also increasing their spend, by upgrading their accommodation from four to five star. “If the pound had to significantly weaken against international currencies, depending on what the rand is doing, we may see a change in the buying patterns.”
Likewise, Craig Drysdale, Sales & Marketing Director of Thompsons Africa, points out that the key indicator will be the rate of exchange. “We always rely on a weak rand, or a strong pound,” he said. However, Drysdale remained optimistic. “The Brits will always come to South Africa regardless of the situation,” he said, adding that the pound was still strong against the rand. He argued that the pound would need to devalue drastically for inbound tourism to see a decline out of the UK. Benadie also pointed out that SA remains a good value for money destination for this market.
While tour operators argued that a decline in the exchange rate of the pound would have a negative effect on buying patterns from the UK, Johan van Biljon, Treasurer of the Gauteng Guides Association, also warns that because of the uncertainty facing the UK, British people may be less likely to travel.
Drysdale also warned that if the UK economy did go into a recession, as some analysts have warned, all travel out of the UK could be negatively affected, particularly long-haul travel.
Frost called on members of the industry to attend the Satsa conference next month. “We’ve got a session. “We have got a session with the experts dealing with exactly this,” he said.
