Four new mega trends offer SA and other emerging economies new opportunities. With September being tourism month, Leadership caught up with our enthusiastic Minister of Tourism, Marthinus van Schalkwyk.
Tourist arrivals in emerging economies are expected to surpass those in advanced economies, such as Europe and North America, as early as 2015. The projected growth rate of tourist arrivals in emerging-economy destinations will be, at 4%, double the projected rate for advanced-economy destinations. This presents South Africa and its emerging-economy partners with substantial opportunities and challenges, says the Minister of Tourism, Marthinus van Schalkwyk.
Not only is intra-emerging economy tourism on the rise, reflecting the emergence of growing cooperation between developing nations via forums like BRICS. The advanced economies of the world however, are increasingly, in a reversal of traditional roles, becoming source markets for emerging economies.
The Minister says this is happening due to the opportunities-pull of the emerging economies, which tie in with four important global trends relevant to especially the tourism industry.
- The consumer landscape is changing as the demographics of the world population are changing and is likely to impact on the patterns of travel demand. This includes frequency and length of stay. The future also includes an aging population, meaning that there will be more elderly travellers and by 2050 there will be three billion people enjoying middle class wealth; therefore more middle class consumers will be enjoying more travel, creating more jobs and increasing the contribution of travel and tourism to GDP. The structure of societies is continuously changing, and it is important for both public and private organisations working in the tourism field to anticipate and react in order to remain competitive.
- Geographic markets are currently shifting. China, the United States and Germany are currently the biggest outbound markets. The WTTC forecasts that by 2023 China will overtake the United States as the world’s largest travel and tourism economy, measured in total GDP terms and the size of the outbound market. It is further forecasted that there will be two billion new middle class consumers emerging from the growing economies of China and India.
- New technology trends over the last number of years saw three major revolutions around the world: Information Technology and communication; Urbanisation and Increased travel. New technology trends also bring new challenges to the tourism sector in terms of disintermediation, reputation management and booking patterns, to name a few. People are more connected through social media forums every day. Recent statistics show that facebook has become the third largest ‘nation’ in the world. It is important that businesses and government departments have effective and efficient social media strategic plans that aim to enhance the image of the tourism sector.
- Air connectivity and the challenge posed by the increased airport taxes employed by some governments has had a major effect on the cost of travel. The WTTC is in the process of developing a report which includes finance models which will demonstrate, country by country, the negative economic impact of taxation on travellers.
Van Schalkwyk, who announced that as from next year South Africa’s annual Tourism Indaba, held in Durban, will be an “all-Africa” affair, says travel and tourism is about people; development and creating opportunities.
Therefore, investment in skills is of critical importance. The opportunities for the African region lie in our natural, cultural, human resources and its authenticity. It is required that the private and public sector need to work together to drive investment in infrastructure, which is conducive to sustainable growth and ensure skills development.
Tourism is the third largest export sector in Africa after fuels and other mining products, representing 7% of exports of goods and services in Africa.
In 2012 Africa received 52 million international arrivals representing US$ 34 billion with a forecasted growth of between 4% to 6% in the number of arrivals for 2013. Of this, Southern Africa received most of the arrivals in Africa, followed by North Africa. South Africa received 29% of the tourism receipts in Africa.
Despite Africa’s 52 million 2012 tourist arrivals during 2012 it represented only 3% of global expenditure in tourism. “This needs to change and Africa must improve on its infrastructure, its connectivity (most importantly air connectivity), its visa facilitation and internal movements, maximizing its marketing opportunity using technology and its synergy – working together we will open the African market for travel and tourism,” he says.
The tourism sector needs to embrace change and leverage innovation by recognising the changing behaviour of the sector and developing smart and effective digital strategies.
“We have to make use of communication technology to successfully promote the destination. There is also a growing need for strategic discussions on issues such as e-visas to be lifted on the global agenda including at the G20,” he said.
There is also a growing need to align air- and tourism policies, including a need to responsibly influence policies around airlines for growth and planning. It goes without saying that better air connectivity means increased tourism and increased tourism means better aviation.
The importance of partnerships in today’s airline business model is critical in terms of bilateral value and it is essential to achieve a lower cost base and scale.
There is indeed a greater need for more open skies and for greater and easier access for airlines, which will in turn mean better air space management.
“We need to further encourage competition and transparency between governments through a collaborative approach i.e. ‘co-opetition.’ By improving the visa facilitation and air connectivity it will enhance our competitiveness,” he says.
For South Africa business-tourism, and the related events-industry, is an important platform from which to grow the country’s share from this expanding market.
It is not only the individual business trip or event that is important. These should not be seen as once-off events that generate some, be it substantial, tourism income or cash flow. It also present the country with valuable opportunities to promote itself as a more ‘traditional’ tourist destination.
Last year, international tourist arrivals grew by 10,2%, which is more than two and a half times the global average of 4%. The business-events industry has been an important contributor to this success.
It is against this background that the South African National Convention Bureau (NCB) was launched last year. And, to date it has been extremely successful in aligning sector wide efforts, and in helping the country to secure 88 major bids for the period 2013 until 2017.
The industry worldwide mirrors the state of the global economy. Following the economic downturn, the road to recovery in the business-events market was volatile. “However, we seem to have turned the corner. According to analysts of the European Incentive and Business Travel and Meetings Exhibition (EIBTM), buyers are successfully adapting to the ‘new normal’. Even in world regions characterised by low or no economic growth, we can still look forward to another period of moderate expansion in meetings, events and business travel,” Van Schalkwyk says.
Referring to the fact that Africa is presently the fastest economic growth region in die word, he says “... professional organisations are attracted to destinations that will bring them new members. There is not a business or sector that can afford to miss out on the African opportunity.”
“And, we want the world to be part of it – to share in, and profit from, our growth. That is why we are inviting the world to bring their events to South Africa – the biggest economy in Africa and a gateway to the continent.
“We have come a long way. The success of the South African business-events industry is reflected in the fact that the International Congress and Convention Association has ranked South Africa 37th on its list of the world’s top business-events destinations, and 15th on its list of long-haul destinations, while we have come out tops as the number-one business tourism destination in Africa.
“Looking forward, our new business events tourism campaign, ‘Rise with us’, is about shifting to a higher gear. Through the campaign, we are asking the world to ‘Rise with us,’ because South Africa offers value for money, is economically and politically stable, has a proven track record, and is a safe and secure destination,” he says.
Over the next year South African Tourism (SAT) will also roll out a global hub strategy created for effectively delivery of marketing messages, with a wider reach than ever before. Core markets, investment markets and tactical markets across regional Africa, the Americas, Asia, Australasia and Europe have been identified and SAT will be opening offices in Brazil, Angola, Kenya and Nigeria, whilst also expanding its marketing presence and partnerships with the trade in South Korea, Russia, Scandinavia, Shanghai in China, Uganda, Ghana and Tanzania.
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