The rand may have lost value against foreign currencies, but this makes South Africa an attractive tourist destination
It`s probably not the prospect of cheap cappuccino in South Africa that attracts foreign tourists here, but it`s obviously welcome if your foreign currency gets you further.
Mary Curtis, a strategist, and Andrea Masia, a senior economist, both associated with RMB Morgan Stanley. said:
Consumers can easily drink three cappuccinos in South Africa for the price of one in America. You can also spend four nights in a Cape Town hotel for the same price as one night in London
`In the bigger picture, the low relative prices of goods and services in South Africa are just another example of the value in South African assets.`
The affordability of goods and services for foreigners gives South Africa an unexpected advantage over peer countries, they write in a note to clients.
According to Curtis and Masia, the weakening of the rand against the major currencies, together with moderate inflation in South Africa in comparison with other countries, means that the relative prices of local goods and services are cheaper than elsewhere. These price differences support foreign tourism.
In the past year, the rand has weakened by around 9% against the US dollar and the euro, and by almost 12% against the British pound
Statistics South Africa`s (Stats SA) latest figures show that almost 98% of tourists who visited South Africa in December were here for holiday. This definition refers to holidaymakers and tourists who come for shopping, other personal reasons and visiting friends and family.
Business travellers made up 1.9% of the total, students 0.2% and people coming to South Africa for medical treatment only 0.1%.
In the fourth quarter of 2023, 18% more overseas tourists visited South Africa than in the fourth quarter of 2022
SSA says the tourism industry is recovering after Covid-19.
Between January and November 2023, visitors from overseas rose by 47% on an annual basis. Most of these visitors were from Europe (especially Britain, Germany, the Netherlands and France). Almost 40% more Americans visited South Africa than in the first eleven months of 2022, and 72% more tourists from Asia.
In December 2023, 3.5 million visitors passed through the country`s border posts (entry and exit), compared to 2.6 million in November 2023. This is also higher than the 2.9 million in December 2022.
Lara Hodes, an economist from Investec, says in a note that the local tourism industry is also doing better.
According to Stats SA`s figures, the income from local tourist accommodation in November was 15% higher on an annual basis (without the effects of inflation) after it was also 11% higher in October than the previous October
This November income of R2.7 billion is slightly less than in November 2018 and 2019, before the Covid-19 pandemic.