25 Jun Tourism Needs to Combat Effects of Fuel Price Hikes
As consumers process the aftereffects of yet another fuel price hike, our first thoughts focus sharply on the things we feel we can do without, the things we can cut out of our lives to keep our households and businesses afloat.
In the boardrooms, they call it trimming the fat, and it is a reality few of us can escape.
No one is immune to a shrinking economy, and SA tourism is no exception.
The impact of a fuel price hike can be devastating for domestic tourism, with fewer consumers able to afford to go on holiday.
Family holiday breaks become a luxury during pressing economic times, and the knock-on effects are felt by local communities and businesses.
The tourism sector directly contributed 2,9% to the South African GDP in 2017, according to the latest release of Stats SA’s annual Tourism Satellite Account for South Africa report, making tourism a bigger contributor than agriculture, but smaller than other industries such as construction and mining.
The World Travel and Tourism Council (WTTC) forecasts this will rise by 2.4% in 2018 and by 3.6% per year between 2018 to 2028.
In 2016, the tourism sector’s 686596 employees outnumbered the respective workforces of utilities and mining according to the report. Employment figures for tourism are estimated to be well over 700000 in 2018.
With that said, we need to address the very large elephant in the room. Petrol is now almost R20 per litre, which immediately means leaving your house becomes more expensive, and it seems there is no let up as international oil prices rise. We’re likely to see a further fuel price increase next month.
Tourism is a petrol-price sensitive product that sells a commodity with high spoilage rates. That is to say, once an aeroplane has left the gate, the profit from unsold seats can never be regained. The same is true of unsold hotel rooms, or attraction tickets. There is a clear, defined correlation between the price of fuel and the cost of travel and accommodation and other related tourism services.
According to Stats SA, “The latest Domestic Tourism Survey findings reflect a general pattern of decline in domestic tourism over the past two years as associated with economic stagnation and re-prioritisation of consumer spending that has taken place in the country during that time.”
South African tourism entities need to start thinking strategically about the relationship between the cost of oil and the tourism industry as fewer people are expected to travel due to the cost of petrol and flight tickets.
If we assume that the cost of fuel will continue to rise on average every year, then the tourism sector needs to plan accordingly, and be creative in our collective response to this burgeoning crisis.
Overseas visitors may feel the pinch of a fuel price hike slightly less than locals, but campaigns and incentives to encourage domestic tourists to get out more will go a long way in cushioning the blow for many in the South African tourism industry.
Rewards and loyalty programmes could be set up to attract new and keep regular customers. Promoting packages which include group transport would also cut spending on fuel drastically, particularly for vehicle hire businesses, but in the long term, we need to support innovations, like electric cars, that will cut the industry’s reliance on fuel.
An article by Brett Hendricks via Sunday World. Image by Juan Fernandez via Unsplash