South Africa Is a ‘Fire Sale’ for Tourists After Rand Rout

South Africa, Capital Markets in Africa: Tourists are flocking back to South Africa’s game parks, beaches and vineyards as a weaker currency and easing of visa rules make holidays cheaper and more accessible.

The number of visitors to South Africa from outside the continent increased by 19 percent over the five months through May, the Tourism Ministry said on July 20. The surging popularity among travelers from markets including the U.S. and Germany can be largely attributed to a weak rand, according to the head of Africa’s largest hotels and casinos company, Tsogo Sun Holdings Ltd.

“South Africa is on an absolute fire sale,” Tsogo Chief Executive Officer Marcel Von Aulock said in an interview in Bloomberg’s Johannesburg office this month. “We’ve always been a cheap destination relative to international markets,” and the falling currency has taken that to extremes, he said.

South Africa’s international tourism boom represents a rare note of optimism in an economy hampered by an unemployment rate of 27 percent and projected by the Reserve Bank not to grow this year amid low commodity prices and after the worst drought in more than a century. The rand is the third-worst performer against the dollar among 16 major currencies tracked by Bloomberg over the past 12 months, having declined 12 percent, and reached record lows against both the U.S. currency and euro earlier in 2016.

While the currency had firmed to 14.3694 against the dollar as of 12:13 p.m. on Tuesday, that’s still weaker than its level in November.

South Africa’s government has softened rules introduced in 2014 that required travellers from countries including China to apply for visas in person, hurting demand in one of its fastest-growing tourism markets. For prospective visitors from China, for example, that meant an often lengthy and costly trip to either Beijing or Shanghai.

Those restrictions, together with a condition that visitors accompanied by children must present a detailed birth certificate, contributed to a slowdown in international tourism arrivals in 2015.

With visas now easier to obtain through tour operators, Chinese numbers were 50 percent higher in May than a year earlier while those from India increased by 37 percent, according to the Tourism Ministry.

“Those markets will recover quite quickly, I think, and will continue to grow,” Von Aulock said.

While the birth-certificate rule has been relaxed, the entry requirements for children remain vague enough to deter some families, said Mmatsatsi Ramawela, CEO of the Tourism Business Council of South Africa. And although overseas tourist arrivals in 2016 to date are up from the past two years, they are still only the highest since 2013, according to Statistics South Africa data. 

Events like the International AIDS Conference in Durban this month have increased the number of visitors, and concerns that terrorist attacks have made Europe more dangerous are also diverting traffic to the southern hemisphere, Ramawela said.

City Sightseeing, which operates hop-on-hop-off city tour buses, has sold more tickets in Cape Town this year and has had to add vehicles and drivers on some days, according to General Manager Paul Nel. Additional direct flights to the city have helped traffic, he said, with Emirates adding a third daily service between Cape Town and Dubai earlier this month.

Source: Bloomberg Business News