TIR 360 TIR Digital Magazine

TIR on Twitter
Lux Resorts

COMMENT: RECESSION HEATS UP SALES COMPETITION

Date published 17.07.2017

SOUTH Africa is now officially in recession. Nobody really needed to tell us that. Unofficially, we have all felt it has been a recession for a long time and have been feeling the pinch in our personal lives and in our businesses.

Just to rub it in, Moody’s whacked us with another downgrade last month, targeting businesses, including banks and parastatals. The economy is in a mess.

Many travel agents and suppliers have been experiencing the same number of customers but a decline in per person spend. If suppliers ever needed agents, they certainly need them now.

One encouraging aspect is that there is clearly still the desire to travel, even if it means tightening the belt.

GDP growth this year is unlikely to be more than 0.5 percent, if there turns out to be any growth at all. And the forecast for the next two years is not much better.

The position could change, of course, if President Zuma did the honorable thing and resigned – highly unlikely – or was forced out and replaced with an able, pragmatic and honorable politician with an understanding of economics and without the baggage of favours owed. They are few and far between. Please, no Zuma Mark 2.

The ANC conference in December will be a watershed event for South Africa, tipping us towards potential recovery or a descent into a Zimbabwean state.

Meanwhile, business has to do its part to keep inflation down and avoid manipulating whole sectors to make excessive profits and pay outrageous bonuses, the evident danger in a society like ours which is dominated by just a few giant conglomerates, often disguised by an array of brands and subsidiaries.

South Africa is a very small market in global terms, so competition is limited and we do not feel the resultant benefits which many other countries enjoy, or the benefits of economies of scale.

The rand naturally creates its own challenges, reflecting the economy, so when we travel overseas, we are paying the same price in the local currency with which the overseas suppliers are operating, making the product here more costly for travellers than for those paying in stronger currencies.

It is all a challenge for South African operators and retailers and it is commendable that they have frequently managed to maintain and some even grow the outbound market as well as they have. Some retailers have surprisingly been reporting record results in the first half of this year, particularly in their leisure business, and others have experienced customer and revenue growth in specific months.

So the business is there, if elusive, and they have been doing something right and have been very active in identifying opportunities and the way to capitalise on them.

Evidently, South Africans with the means are travel junkies and will thankfully continue to economise in other areas in order to get away. But intensified sales and promotion efforts will be needed to keep the desire and momentum going and to compete.

• To share your feedback on this or any other story in the TIR, email sarah@tir.co.za. Names will not be disclosed without consent.


<< Back to current enews | << Back to archive

Read the full editions of TIR
© Copyright 2017, TIR Southern Africa and Galileo Southern Africa, All rights reserved.