South Africa's value makes it a very attractive destination according to new IMF report
The global upswing in economic activity is strengthening – economic growth is projected to rise to 3.6% in 2017 and 3.7% in 2018, driven by rising consumer and business confidence – according to the International Monetary Fund’s (IMF) latest World Economic Outlook Report.
www.bizcommunity.com reports that Sigal Geva, COO at Premier Hotels & Resorts shares: “As global economic growth is currently being led by Japan, Russia, emerging European markets such as Hungary and Croatia, along with emerging Asian markets like India and China, we anticipate an increase in tourism from these countries. Furthermore, China is expected to become the country with the highest propensity for travel abroad by 2022 and one of our biggest source markets.
“The easing of South Africa’s visa requirements has already seen enormous growth in Chinese visitor numbers and we foresee this to be a continuing trend. China is already the largest source of tourism expenditure in the world, with this set to grow by 10.9% over the next five years, propelled largely by GDP per capita and the increase in middle-class households.
“In 2018, global economic growth will see new markets being introduced to South Africa, taking advantage of relatively low price increases affecting our air travel, accommodation and road transport. Domestic tourism is also likely to flourish… The growth of the global economy can help bolster the South African travel and hospitality industry and ultimately, our (RSA’s) economy.”
“On the other hand, with downward growth in the United States and the United Kingdom – due to the rocky Trump administration and Brexit – we believe that there may be a slowdown in tourists from these markets. That said, the rand’s devaluation has made South Africa a highly affordable, and therefore attractive travel destination,” Geva told bizcommunity.com.
With global economic growth gaining momentum, OPEC (Organization of the Petroleum Exporting Countries) predicts higher demand for its crude oil. This demand, in turn, influences oil prices which are expected to rise by 5 per cent in 2018. Airline prices will consequently be affected, with a 3 per cent increase predicted for air prices in the Middle East and Africa region. Geva says that this increase, which is slightly lower than the global projection of 3.5 per cent, could possibly impact the decision of cost-conscious international tourists to visit South Africa, given the 0.3 per cent increase forecasted for Latin America.
She continues: “They might be willing to overlook this, however, with hotel prices in the MEA region set to increase by only 0.6 per cent in 2018, in contrast to the global prediction of 3.7 per cent. PwC’s Hotels Outlook: 2017-2021 forecasts moderating growth in tourism to South Africa, with the result being the average daily rate rising from R1,160 ($85) in 2016 to R1,650 ($120) in 2021. The report also projects that despite the slowdown in tourism, guest nights will grow faster than room supply and the occupancy rate for hotels will rise to 64.3 per cent in 2021.
“In 2018, global economic growth will see new markets being introduced to South Africa, taking advantage of relatively low price increases affecting our air travel, accommodation and road transport. Domestic tourism is also likely to flourish due to the global rise of travel and lodging prices far exceeding those in South Africa, coupled with the country’s depreciating currency. The growth of the global economy can help bolster the South African travel and hospitality industry and ultimately, our own economy,” concludes Geva.