SOUTH African consumer
confidence took another
knock following Finance
Minister, Nhlanhla Nene’s,
2015 budget speech late
last month, which revealed
consumers would be paying
more tax and higher fuel
levies, and would likely have to
tighten their belts even further
in the near future.
This is likely to have a
considerable impact on
disposable income – and
therefore travel – as a direct
result. Michael Snyman, cfo
of Flight Centre South Africa,
says when people are taxed
more, in whatever form, this
automatically means less
disposable income. “People
will tighten their purse strings
and luxuries like travel will
become harder to afford.”
Corporate travel will
also be affected, as the
budget speech will do
nothing to improve the
waning confidence in the
SA government by the
international community, says
Gary Mulder, financial director
of Club Travel.
“The impact on the travel
industry will come for the
most part from the retained
sentiment that this budget
is not investment-friendly. It
does not stimulate growth,”
agrees Mladen Lukic, gm of
Travel Counsellors. He says
until we have an environment
where SA companies are
compelled to move out of the
holding pattern and invest
locally, retail travel will, at
best, be stagnant.
Government too will continue
to cut back on travel, which
will also influence travel and
tourism. Minister Nene said
in the budget speech that
government spending on
travel and subsistence would
be curbed by 4% a year.
Catering, entertainment and
venues would be cut by 8%
per annum.
“We are concerned that
these cuts will have a
massive impact on some
of our already battling
hotels, conference venues,
restaurants and entertainment
facilities that the government
uses. Government is a major
purchaser in the hospitality
and tourism sectors and
significant cuts like these
are going to hurt a number
of businesses,” says head
of Advisory Services at Grant
Thornton Gillian Saunders.
The aim is not necessarily
to reduce the number of
trips in government but
rather to focus on a better
travel policy to cut costs
per trip, says Gary. Mladen
agrees: “If government
departments apply this
directive by re-assessing their
travel patterns and volumes,
then the impact will be
minimal. However, historically,
government departments have
reacted by maintaining their
travel volumes and looking
for the required savings by
looking for discounts and by
reducing service fees. In this
scenario the impact will be
significant.”
