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Last year, the term “revenge travel” came into vogue, referring to the release of the pent-up demand for travel that had built up during the Covid-19 lockdowns. That urge to travel has not abated this year, with tourism hotspots such as Italy looking to beat their records for overnight stays set in 2019, while France is set to see record spending by visitors this year.
Global flight bookings in the year to March were already up 25% year-on-year, 31% higher than in the 12 months to March 2019, according to data from the Mastercard Economics Institute.
This boom in tourism is happening even as rising fuel costs and other forms of inflation – along with higher interest rates – have eaten into household budgets. Travellers seem happy to absorb the higher costs to feed the travel bug.
South Africa has not been left behind in all of this and may even benefit further as the costs of travel rise in developed markets. With a weaker rand, tourists are finding South Africa a value-for-money destination, adding to our usual drawcards: excellent climate, beautiful scenery and extensive wildlife.
Travel and tourism remains one bright spot in South Africa’s economic outlook, even as traditional industries such as mining battle against weaker commodity prices and production challenges.
Tourism can also help trigger increased employment and fixed investment, either directly in hotels and hospitality, and airlines, or indirectly in industries such as retail and entertainment.
The official numbers bear out the view of tourism’s rebound this year. Stats SA numbers show that there was a 63.4% rise in total tourist numbers year-to-date to the end of August when compared to the similar period last year. Overseas visits were up by 59.4%, mostly from Europe and the UK and Germany in particular. Tourism from the rest of Africa was up 64.8%, mostly from SADC countries. The number of travellers from China increased by 246.6% year-to-date compared with the similar period last year, supported by the lifting of Covid-19 travel related restrictions.
According to Investec economist Lara Hodes, income derived from the domestic tourist accommodation industry increased by 29.1% in the 12 months to July, with receipts close to pre-pandemic levels.
She notes that the hotels category (up 30.3%) and the “other” accommodation grouping (including lodges, bed-and-breakfast establishments, self-catering establishments and ‘other’ establishments not elsewhere classified – up 34.2%) were the primary contributors to the second quarter’s notable increase.
“Reported occupancy levels are still below those recorded pre-pandemic; however the outlook remains favourable, with tourism arrival statistics up significantly,” she adds.
Safari and game lodge visits
These trends support some of the niche forms of tourism. A specific growth area is in the safari and game lodge sector, with many foreign tourists keen to enjoy the wealth of wildlife that South Africa has to offer.
We spoke to Federal Airlines, a shuttle and charter flight business specialising in flights to South Africa’s top private game lodges. Investec recently provided Federal Airlines with an aircraft-secured revolving credit facility to finance its acquisition of six new Cessna Grand Caravan 208B EX aircraft. The new aircraft have joined the Federal Airlines’ fleet helping it to expand and take advantage of the increasing number of tourists looking to visit South Africa’s game lodges.
Find out more about the Investec transaction with Federal Airlines
“Investec is happy to conclude this first transaction with Federal Airlines. They are a leading player in the premium game lodge shuttle market and we’re delighted to help them grow their fleet with new aircraft to help grow the tourism industry in South Africa.” - Mamfaladi Mabece, Aviation Finance consultant at Investec Bank Limited
“We are pleased to conclude the transaction with Investec and are grateful for the flexibility the facility provides Federal Airlines to grow our business and provide better service to our guests. It was a pleasure working with the Investec team to conclude this transaction." - Mariska Vos, Chief Financial Officer of Federal Airlines
Julian Edmunds, Chief Commercial Officer at Federal Airlines shared his insights into tourism trends in South Africa with us:
Are you seeing a significant pick-up in tourism/charter flights this year? How does this relate to pre-Covid levels?
The growth in tourism flying since mid-2022 has been staggering and has surpassed pre-Covid levels. Both our shuttle and charter services have seen a phenomenal recovery since the pandemic-related travel bans were lifted, with charter flights remaining a popular option for customers looking for that extra exclusive service offering.
What is the approximate mix of local and international tourists? And which countries?
During Covid-19, we really were only able to fly local tourists, however, since the recovery, many of these tourists can now fly internationally and international tourists can now fly to South Africa; so we have seen a total reversal in the demand. We still hold SADC tourists close to our hearts and offer them special fares, as appropriate. The US takes the lead for international visitors, followed by the UK, Germany and the Netherlands. The Far Eastern market is now starting to return, after the restrictions lifted in those regions
Please take us through some of the seasonal and other factors related to your market segment.
Our market is very seasonal being game lodge focused. This mainly revolves around International school holidays and the weather in South Africa. Our main season is June to October, then we have hiatuses over Christmas and Easter.
What are your key challenges in the current market?
The inflationary environment and global supply-chain challenges affecting the delivery of spare parts add complexity to our operational planning and delivery. Like many global airlines, we plan around those to ensure the high levels of reliability and service standards our guests expect are not compromised. The post-pandemic growth in air travel, along with other factors are resulting in crew shortages, which is another challenge we are working through.
What do expect to be your main challenges in the next 12 months?
The supply of flight crew and the potential for global instability, either financial or political, will always be a potential risk and challenge. Our focus as a business remains to be nimble to counteract any potential risks from external factors over which we have limited control.
Are there any interesting stats you can share with us?
Federal Airline’s shuttle services will have our busiest year, expecting to fly over 42,000 guests in 2023. The shuttle services serve 24 different airstrips/airports, supporting the logistics of 118 Lodges spread over 11 parks, reserves and regions. Our charter operations are expecting to operate more than 950 charter flights within South Africa and to nearby regional destinations.