Economic uncertainty to prevail this year
WITH economic
downgrades, a volatile
rand and rising costs,
South African consumers are
expected to continue to feel
the pinch into 2018 and this
is likely to impact directly on
corporate and leisure travel.
Late last year, Angus
Macmillan, group
spokesperson for City Lodge,
said big influencing factors
would be the ANC presidential
candidate (since confirmed
as Cyril Ramaphosa) and the
Finance Minister’s budget in
mid-February. “Sustainable
economic growth is vital for
the hospitality industry.”
But with most of these
factors far outside agents’
control, opportunity still exists
for those who find methods
of conducting trade, despite
pressure from these external
circumstances.
Terry Munro, md of
Beachcomber Tours, says
the unpredictability of the
value of the rand will be one
of the biggest challenges,
and that the travel industry
is going to need to find ways
to still do business in this
tough economic climate. For
example, he says, the industry
needs to encourage clients to
travel to give them the stress
relief they will need, but will
have to source good value-formoney
packages.
These sentiments were
echoed by Ramesh Jeenarain,
md of World Leisure Holidays:
“Continued political and
economic uncertainty will be
one of the biggest challenges
affecting travel in 2018. Our
recommendation is that travel
agents encourage their clients
to take advantage of great
deals and, where possible,
book and pay for future travel
so as not to be negatively
impacted by currency
devaluations.”
More optimistic about
prospects for the new year
is Elisna Bergset, key
account sales for
Development Promotions.
“We think any challenges
that may arise in the industry
will be internal – we have
seen time and time again
that South Africans travel
despite economic pressure
and perceived global threats.
Instead, the challenge will be
who gets that business.” She
believes the travel industry
will need to be more proactive
rather than reactive to clients’
needs.
Elisna says the economic
pressures are more likely to
impact on destination choice
rather than whether to travel
or not. “The destinations
clients choose will depend
greatly on affordability, and
good value-for-money product
will rise to the top – not
necessarily the cheapest
products, but definitely ones
that offer value.”
She also believes that
tighter budgets will result in
consumers and corporates
heading back to travel
agencies for advice and deals.
“The public have become
savvy and realise the value of
booking with an agent instead
of being a queue number
online.” She says suppliers
and tour operators will need
to strengthen relationships
with agents. “For us, this
means good commission, not
taking direct bookings and,
of course, great service. We
understand that we must work
as partners with the trade
instead of their opposition.”
Cruising to feel the crunch
The impact of the
economy is likely to
be felt by the cruising
industry, says Ross Volk,
md of MSC Cruises.
“With rising costs and
unemployment, the
available cash for holidays
is limited. This will put
pressure on all facets of
our travel sector, including
cruising.”
He says this hasn’t
been helped by changing
government regulations
around visas and other
documentation, such as
the recent amendments in
Mozambique, which meant
cruise passengers who
did not hold South African
passports were unable to
disembark in the country
if they hadn’t obtained
visas prior to arrival.
However, Ross says
the arrival of the MSC
Musica is something new
and exciting for South
Africa and an important
opportunity for agents to
leverage off.
Brace yourself for more red tape!
OTTO de Vries, ceo of Asata,
says the biggest challenges
for travel agents in 2018 will
hinge on compliance and
legislative requirements –
from POPI and PCI DSS to
the VAT issue. “To retain Iata
accreditation, travel agencies
will have to become PCI DSS
compliant as of March 1.
Expectations are that POPI
will also be implemented
early next year, requiring
travel agents to be compliant
in terms of protecting the
personal information of their
clients.”
He warns that agencies are
going to need to proactively
take steps to ensure they
follow the letter of the law.
“The Asata Code of Conduct
and Charter requires its
members to comply with
South African legislation.”
In terms of VAT, Otto
says Asata will continue
to represent the travel
industry’s interests in
discussions with Sars.
“The zero-rate VAT
issue raised by Sars
was unexpected and will
continue to impact the travel
industry in 2018. We are
in discussion with our legal
representation, industry
stakeholders and Sars to
understand the issue and try
to resolve it.”
Crunch-time for GDS decisions
GDS fees remain a
significant factor in
agents’ expenses but,
according to Wally
Gaynor, md of the
Club Travel Group, with
the implosion of GDS
surcharges by airlines,
agents are finding
themselves between a
rock and a hard place.
“You can go with direct
channels to save on fees
and remain competitive,
or stick with the GDS
systems and potentially
lose clients,” explains
Wally. He anticipates
this will become an
increasingly difficult
choice in 2018.
It’s clear that airlines –
including Lufthansa, which
was one of the pioneering
airlines to shift bookings
away from the GDS –
intend to continue along
this path. André Schulz,
gm of the Lufthansa
Group Southern Africa,
says the airline plans to
expand its direct channels
in 2018, a continuation
of a new sales and
distribution strategy it
began implementing back
in 2015.
“The long-term goal is to
be a ‘first mover’, offering
attractive flights and
services that meet the
increasingly specialised
and dynamic requirements
of sales partners and
corporate customers,”
he says. “With the most
recent technological
solutions, customers will
benefit from additional
content that could not be
made available before,
as well as from optional
services that are more
innovative, affordable and
customer-oriented than
before.”
Direct Connect is the
core of the Lufthansa
Group’s future distribution
strategy, and André says
it will be a big focus in
2018 for developing
markets, including South
Africa. “Saving the €16
(R237) GDS charge by
using Direct Connect
is just one short-term
benefit for the TMC.
The major long-term
benefit will be content
differentiation, which
means specific sales
promotions or discounted
ancillary products will be
displayed with preference
via the Direct Connect
distribution channel.
Tech: more friend than foe
WHILE the
continued growth
of online travel
agencies and the
threat of suppliers
encroaching on
agents’ territory
by going direct
are some of the
threats commonly
associated with
technology, Wally
Gaynor of Club Travel
still believes tech
can unlock some
big opportunities for
travel agents this
year. “Combining
technology to
increase productivity and enhance
personalised service will be a key
focus.”
Aadil Esack, marketing and
product manager of XL Travel,
agrees and says the possibilities
that technology can cater for are
endless and “extremely exciting”.
He says TMCs would be wise to
invest in the right solution for their
business.
“Big challenges will be faced by
those who are unwilling to adapt
or adopt as technology provides
solutions that make
sense in terms of
effort and money.
But it requires
change and, in our
industry, many are
happy to be stuck in
their comfort zones
or may feel that it
does not impact
them – but it will,
sooner or later!”
Tour operators
are going to play a
big role in providing
technology to the
benefit of agents,
says Ramesh
Jeenarain of World
Leisure Holidays, a company that
has launched an online booking
engine that agents can use for
quoting and booking. “It is white
labelled, so they can take the
quote as they receive it, add their
own logo and send on to their
client,” he explains. Technology
is also enabling operators to be
available around the clock, says
Ramesh. “Essentially, we are now
operating 24 hours a day, seven
days a week for those agents who
embrace technology”
Mobile lags behind
In 2017, mobile
was touted as
being the arena
where the travel
industry expected
to see the most
growth. However,
according to
Yolandé Bouwer,
director of
Agentivity – Africa,
the ability of the
industry to deliver
on customer
needs has been
inadequate so far.
Yolandé says the
reason for this is that many of
the available solutions are not
necessarily priced for the agent
but rather the large, multinational
customer. “Also
some agents do
not realise that
by partnering with
a local developer,
they can actually
get something done
quite cost-effectively
– they think it’s all
cost prohibitive.”
She explains that
while Agentivity has
seen an uptake
among clients in the
pushing of itineraries
to either third-party
mobile itinerary
suppliers or their own custombuilt
ones, there is opportunity for
far more growth than seen in the
previous year.
Tough climate continues for airlines
RISKS concerning policy
uncertainty, the junk status
of the country and weak
economic growth are all
likely to have an impact
on the aviation sector in
2018. This is according
to June Crawford, ceo of
Barsa. “Airline profitability
will remain a key challenge
as will ways to minimise
cost without compromising
operational safety and
ensuring improved service.”
Her views are echoed
by André Schulz of
Lufthansa, who says the
overall rising costs of
travel while maintaining
profitability and exceptional
customer service, as well
as the continual changes
to regulations in various
markets, will be major
challenges for the new year.
“2017 did present a few
unexpected developments,
specifically within the
regulatory environment, that
impacted on all airlines. The
continued challenging world
economic state and the
volatility of currencies and
oil prices will probably have
an impact in 2018,” adds
André.
Government’s stance
It appears that African and
international carriers should
not expect the South African
government to ease any of
the regulatory burdens that
have bedevilled the industry
in recent years.
Of particular concern,
says June, are some of
the statements made by
the Minister of Finance,
Malusi Gigaba, in his
Medium-Term Budget Policy
Statement in October last
year on the topic of the
SAA bailout. The Minister
said: “It is in our national
interest to have influence
over our connectivity to all
parts of the world, and not
have to rely exclusively on
the profit and scheduling
considerations of global
airlines. SAA sells South
Africa’s economy, tourism
and culture to every one
of its passengers. Global
airlines do not, and will
not, perform this priceless
marketing and branding role
for us.”
June says this statement
undermines the role that
African and international
airlines play in investing
in the development of
their routes to South
Africa and marketing the
destination either directly
or through tour operators
and destination marketing
organisations.
Agent-airline
collaboration
However, in this difficult
environment there are
opportunities for far more
cohesive co-operation
between agents and
airlines. June points out
that the two are inextricably
linked: “I would hope that in
2018 we would see better
collaboration between the
two because, ultimately,
both want to provide the
best possible customer
service experience.”
She adds that one
example of this would be
providing passenger contact
details to the airline for
delay information to be
provided directly to the
customer. “Ultimately the
needs of the passenger
should be paramount.
Barsa to drive collaboration
In line with Barsa’s belief
that closer collaboration
between role players
is a winning formula
for all stakeholders,
the association will be
convening an aviation and
tourism summit in March.
June says: “We need to
establish common goals
and pursue common
interests for the common
good of the aviation
industry and its long-term
sustainability.”
Other focus areas
for the association will
include working to build
strategic partnerships
to grow the air transport
sector and ensuring
aviation safety and airport
operational efficiency,
amongst others.
“The global Carbon
Offsetting and Reduction
Scheme for International
Aviation (Corsia) remains
at the centre of our
environmental agenda,”
says June.
“Barsa continues to
collaborate closely with
Iata to ensure that
airlines are ready to
implement monitoring and
reporting mechanisms
for CO2 emissions from
January 1, 2019.
Big-selling destinations for this year
INDIAN Ocean island
destinations are expected
to be the top selling
itineraries for 2018, with
Maldives continuing to gain
an increasing portion of the
market share.
Ramesh Jeenarain of
World Leisure Holidays says:
“The introduction of direct
flights from Johannesburg
to Maldives will bring the
destination within easy
reach of South African
travellers and I know that
we are going to see an even
greater demand for this
destination than we’ve seen
in the past.”
He adds that Mauritius
is an “evergreen favourite
destination” for South
Africans, and that World
Leisure Holidays also
expects to see an increase
in traffic to Réunion,
Seychelles and Zanzibar.
According to Development
Promotions, which offers
products in all seven
continents, high-value
destinations will continue
to do well. Elisna Bergset
says: “Something that has
seen a surge recently are
bucket-list itineraries like
the Northern Lights, Alaska,
several Southern American
itineraries and iconic
European cities.”
She adds that Cuba
has been one of the
big surprises of late.
“Many South Africans are
enthusiastic about seeing
Cuba before globalisation
changes its historic charms.
We were quite surprised to
hear that some suppliers
have dropped their Cuba
itineraries when our sales
there have increased.”
Sri Lanka is another
destination South Africans
are showing huge interest
in. Elisna says: “With
the golden beaches and
favourable diving conditions,
as well as being known for
the most delicious tea, we
shouldn’t really be surprised
that Sri Lanka is garnering
interest from avid travellers.”
Interestingly, Elisna says
one of the most unexpected
yet pleasant developments
in terms of destination
choice in 2017 was the
resilience of South African
travellers, despite growing
security concerns. “Turkey
is a great example. When
many European and North
American travellers avoided
it, South Africans still travel
there without incident. Even
our trips to Iran through
G Adventures have
increased!” she says.
For Trafalgar, judging by
forward bookings, France,
Russia, Egypt, Greece and
Turkey are expected to make
a big comeback in 2018.
“France is definitely on the
rise again and looks to be a
sought-after destination for
2018,” says md of Trafalgar
South Africa, Theresa
Szejwallo. “Russia has
shown strong growth with a
68% increase in sales from
2016. This could be partly
due to the fact that South
Africans no longer need
visas to visit Russia.”
Regional destinations in
Africa are also expected to
be popular choices in 2018.
Wally Gaynor of Club Travel
says the dropping of visas
in Angola may see it emerge
as a new destination for
South Africans.
Wally also expects Asia
to continue to grow, with
consumers travelling
further afield than Thailand
into Cambodia, Laos and
Vietnam.
Top travel trends
1. Personalisation
Otto de Vries of Asata
says the association’s
21st Century Travel Agent
study revealed a need for
travel professionals to
specialise and to assist their
customers with an end-to-end
experience, no longer just the
transaction.
This growing demand for
personalisation stems from
a large number of travellers
educating themselves about
destination and product
offerings before they even
consult an agent, says
Ramesh Jeenarain of World
Leisure Holidays.
“They are looking for
something other than the
norm of sun, sea and sand
and often there is opportunity
for agents to showcase
different value offerings to
their clients that might spark
their interest. In Mauritius,
for example, we have
partnered with our European
counterpart and are offering
a golfing and culinary tour in
March to Long Beach with
a French chef and South
African celebrity chef who
will not only be playing golf
with the participants, but
conducting master cooking
classes,” adds Ramesh.
There is also tremendous
opportunity to make use of
technology to offer clients
great personalisation,
says Yolandé Bouwer of
Agentivity. “It’s really missing
in the current travel sales
environment and can be
achieved through harnessing
the very rich customer data
your agency generates every
day and using it to add
incredible value to all your
customer touch points.
2. Airport tecnollogy
Access to live information is
likely to enable travellers to
better manage their travel
experience before arriving at
the airport.
André Schulz of Lufthansa
says the Lufthansa app,
which has been developed
in conjunction with major
European airports, will allow
travellers to receive ancillary
offers with personalised
push notifications, take
advantage of upgrade offers
and receive baggage belt
information after landing, via
their smart devices.
“Third-party businesses
supplying travel-related
products, such as suitcases,
will work with airports to
streamline processes,” says
André.
“For example, Rimowa
worked with Lufthansa to
develop the tagless suitcase
that could be tracked in real
time by the traveller in the
airport, and Lufthansa rolled
out Amadeus Airport Pay, a
wireless payment solution,
which makes traveller
transactions on upgrades
and additional baggage
fares more convenient,”
he adds.
3. Last-minute travel
The uncertain economy
is likely to lead to many
South Africans looking for
a good deal. According
to Theresa Szejwallo of
Trafalgar South Africa,
this will lead to lots of
last-minute decisions with
an increasing number
of clients waiting for
the right deal and then
booking on the spot. “We
will see more people
booking their holiday
closer to departure date
than before.”
To incentivise travellers
to book longer in advance,
Trafalgar has created
interest-free payment
terms. After paying a
deposit, Trafalgar will hold
a seat and guarantee
the price, and the earlier
clients settle the balance,
the more they can save”
4. Corporates go green
Environmental friendliness
is becoming a big factor in
corporate travel, says Angus
Macmillan of City Lodge.
“This trend will continue
particularly when it comes
to energy, water and waste
management efficiency.”
Angus notes, however, that
this goes hand in hand with
hotels meeting the vital
prerequisites of location,
security, WiFi and quality
food and beverage offerings.
5. Group travel revival
According to Theresa, group
travel is becoming ever more
popular as people realise
that travelling together can
be more enjoyable than
travelling alone. “The hasslefree
element of group travel
in an increasingly uncertain
world and an extremely volatile
South African market is also
increasingly attractive to
travellers today,” she says.
“Travellers want to eliminate
risk as much as possible. They
don’t want to face the risk of
something going wrong with
their reservation, the risk of
having to pay more due to the
volatility of the rand and the
risk of not receiving a return on
their investment – that is, an
enjoyable holiday.”
She adds that group travel
is also becoming a popular
option for ‘bleisure’ travel
(those combining a business
trip with a holiday) as an addon
option. “Often corporates
have limited time before or
after their business trips.
Travel agents can offer these
travellers a City Explorer to one
of the European business hubs
and advise adding between six
and eight days to the client’s
trip.” She says Trafalgar offers
City Escapes in London, Paris,
Rome, Amsterdam as well as
two new destinations, Berlin
and Madrid. “The appeal is
that clients don’t have to pack
and unpack as their entire stay
is in one city.”
She expects that guided
holidays will also gain in
popularity as staff incentives.
“No one has the time these
days to put a detailed plan
together and at the same time
know how to deliver ‘the good
life’ as Trafalgar does. Trafalgar
will take care of all the details
and the logistics for incentive
trips in any of the 65 countries
that we cover. Group discounts
also apply for groups from five
guests.
Asata focuses on professionalism
WHILE economic and
political instability may
be viewed by some as
a threat, others believe
this climate provides the
perfect environment for
travel agents to get back
in the game as travel
professionals.
Otto de Vries of Asata
says the plethora of
information on the
Internet, the volatile geopolitical
environment and
the increasing maturity
of corporate travel are
all areas in which 21st
century travel agents can
show their true value.
“Asata is working
to enhance the
professionalism of the
sector through such
initiatives as the travel
designation of travel
practitioner through
Saqa and the Asata
Professional Programme,”
he says. “By going
beyond the transaction
and assisting our
customers with the entire
journey and, strategically
in terms of corporate
travel and shaping
travel policy, we have an
opportunity to show our
customers how we add
value and charge for it
accordingly.”
To achieve these
goals, the association
says its annual strategy
will be based on five
strategic pillars: effective
communication, member
support, consumer
awareness, partner
relations and selfregulation.
“Within each
of these pillars, Asata
has been conducting
initiatives and will
continue to run these
into 2018,” says Otto.
These initiatives will
include the relaunch of
the Asata Professional
Programme and awarding
of Travel Practitioner
designation, the Asata
Awards, new sponsorship
opportunities for partner
members, engagement
with Treasury and Sars
and its ‘Travel with Peace
of Mind’ consumer
awareness campaign.
Car rental to compete on price and tech
CAR-RENTAL companies are
facing increasing pressure to
offer ever-more competitive
pricing, despite rising costs
and overheads.
Lance Smith, executive:
Sales at Avis Southern
Africa, says car-rental
companies’ ability to raise
rates in line with increasing
costs is a huge challenge,
especially as these may
accelerate as a result of the
ratings agencies’ downgrade
of the SA economy.
This was echoed by
Melissa Nortje, executive
head: Strategy, Development
and Marketing at First
Car Rental, who says she
expects the industry to be
highly competitive on price in
the coming year, especially
in light of the financial
woes many consumers and
corporates are facing.
Price wars
“In 2017 South Africa
experienced a technical
recession, and the economy
continues to struggle,
resulting in a loss of both
consumer and business
confidence in South Africa.
Political instability, which
is expected to persist until
at least the 2019 national
elections, and its effects
on the credit rating are
an impending concern – a
downturn in the economy
means there is less travel
spend, while interest rate
hikes pose substantial fiscal
impact on fleet companies’
bottom line,” says Melissa.
She says car-rental
companies have looked
toward inbound leisure
markets as a result of
declining local demand
– but this has been
impacted by a price war
between rental companies.
“Traditionally there would
be an upside to a weaker
rand, resulting in growth
from the inbound leisure
segment, but unfortunately
some car-rental operators
were extremely aggressive
and irresponsible with their
pricing in the market place,
resulting in non-profitable
business for all – and
damaging the baseline for
2018 pricing too.”
Tech at the forefront
Rather than competing on
price, Melissa believes
car-rental companies’
technology offering will set
them apart. “To remain
competitive in this industry
means we would continue
to provide consistent
exceptional service
combined with high-value,
data-driven technology and
resource efficiency.
“In recent years, the
implementation of smarter
IT systems and the
subsequent use of the
Internet across mobile
platforms are becoming
increasingly prevalent. First
to market on a customer
efficiency level takes market
share, so constantly evolving
IT development becomes
a large company expense,
and one that is necessary
to stay in business and
relevant,” explains Melissa.
These technological
innovations are not only
aimed at the consumer
but agents as well, who
are demanding access to
information 24/7. “Selfservice
will be the key to
any successful supplier;
gone are the days where
our customers ask us for
reports,” says Melissa.
First Car Rental has
launched its FirstCarConnect
platform for agents, which
has additional security
measures allowing
administrators to add,
amend or remove agents
who can book cars. A
dashboard with statistics
highlights exact car-rental
usage and there are various
structured data dump
options for reservations or
invoices. “Any service we
provide for them can be
accessed via this platform,”
Melissa adds.
Lance agrees that
technology will reshape car
rental in the near future,
and mobile, in particular, is
expected to dominate Avis’s
technology strategy. “As a
company, we believe that our
future will be mobile-driven.
For us this means that the
entire car-rental experience
will change. The old model
of customers queuing for
service at a car-rental
counter, then painstakingly
selecting options from a
checklist, is on its way out.”
Avis has re-engineered
its app to allow customers
to search for cars by size
or features. It gives local
car-rental locations; special
offers and extras; allows
the tracking of loyalty
benefits and effects booking
amendments or upgrades.
Zipcar heading to SA?
Zipcar is an international
car-sharing service that
forms part of the Avis
Budget Group. Customers
join the service for a
monthly fee and are then
able to reserve and drive
any one of the numerous
Zipcars located around
major cities.
Currently there are
more than 10 000 cars
on fleet across 500
cities in nine countries.
Zipcars are commonly
found at airports, stations,
universities, businesses
and residential complexes.
Lance says, far from
being a rival to car rental,
Avis sees Zipcar as a
complementary service.
“If we feel there is a
demand for Zipcar in
the local market, we’ll
bring it to South Africa.
When we do, our Zipcar
membership will live on
your smartphone as an
app. When you need a
car, you’ll have a car,”
says Lance..
