Fuel price hike adds fuel to fire for tourism
The industry is buckling as it is - another price hike might sound the death knell, say experts
The spiralling petrol price is hitting tourism hard, and the country is dangerously close to becoming too expensive for local and international visitors – a blow to an industry that employs 700,000 people.
This is according to Brett Hendricks, general manager of the Thebe Tourism Group, the largest black-owned tourism group in the country, in the wake of this month’s 80c petrol price hike, which pushed the fuel price to above R15 a litre.
In January, a litre of unleaded 95 petrol cost R13.93 a litre inland. Wednesday’s increase pushed it up to R15.20.On top of this, the AA warned this week that, based on the current rand-dollar exchange rate, there could be another price hike at midnight on the first Wednesday of July.
Although this prediction was still “speculative”, AA spokesperson Layton Beard said: “The rand remains weak against the US dollar and based on the data that we are looking at … the increase is still there. For a moment‚ at least‚ it looks like there is going to be another hike. But that is speculative. I think we’re going to have to wait until the middle of the month and we will have a clearer picture of what will happen in July.”
Decade of ‘crazy’ increases
If this happened, Hendricks warned that the tourism sector would continue to take a knock.
Hendricks told Times Select that the “crazy” fuel increases over the past decade threatened to take transport costs from among the lowest factors when pricing travel packages, to among the highest.Petrol price increases in 2018 (inland)
Unleaded 93 Unleaded 95
January R14.20 R13.93
February R13.90 R13.63
March R13.54 R13.27
April R14.23 R13.89
May R14.72 R14.38
June R15.54 R15.20“If you were to actually cost a tour, transport never used to be the most expensive item. At some point in time it’s going to be close to accommodation, and that’s the biggest part of the itinerary,” he said.
Thebe said on Wednesday that tourism was a “petrol-price sensitive product”, and that people were not obliged to travel except for business and family reasons.
“People, therefore, view leisure travel as a luxury, and people are expected to travel even less now that petrol is [more] expensive,” the group said.
Expanding on this, Hendricks said the middle class would be forced to reconsider taking a trip, or choosing closer destinations. And this was not just because price hikes result in tourism products, such as hotels or tour packages, becoming more expensive – but also because the effect on day-to-day costs was eating into people’s disposable incomes.“Transport by road has become very expensive,” he said.
Hendricks added: “I think that people who drive between Joburg and Durban will start thinking about it. People who say: ‘Hey, let’s go for the weekend’ might stop and think: ‘Actually maybe we can go next month.’ Where they were going three or four times a year, now it’s maybe twice.
“In the Western Cape where people might go to the Garden Route, they might say that it’s, maybe, best to go to Langebaan.”
Already, he said that tourism numbers were significantly down in the Western Cape and KwaZulu-Natal for the December festive period. While much of the decline in the Western Cape could be attributed to the drought, Hendricks warned that unless something was done to keep costs low and to keep South Africa as an attractive tourism destination, there could be a serious decline in tourism, which contributes R402-billion per year to the country’s GDP.
“We don’t want to become a destination where it’s too expensive to travel. We’re already long haul for the international market.“I think the latest data from Stats SA is that [tourism] contributes 700,000 jobs in the country. Currently, more people are employed in tourism than in mining, and we saw government and the president say he wants to double this figure, so closer to 1.5 million. We need to find some balancing act. Job creation is important, and an increase in the number of people who come to the country, because that helps.
“But we need to be competitive from a pricing point of view because there are competing destinations. When you look at the cost to come to Cape Town in peak season, you might as well go to Thailand.
“We’re becoming expensive ... and it’s all linked to the economy at the end of the day,” said Hendricks.