AFRICA INVESTMEN: Weak rand shines warmly on South African tourism

Reuters
Cruise liner MSC Symphony sails past Cape Town's popular Waterfront district
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Cruise liner MSC Symphony sails past Cape Town's popular Waterfront district in this picture taken …

By Stella Mapenzauswa

CAPE TOWN (Reuters) - South African policymakers have watched in horror as the rand has plunged against the dollar over the last year, bringing inflation and higher interest rates, but the tourism industry is happily raking in the extra dollars.

With most sectors struggling to grow after a 2009 recession, tourism has stood out as a rare bright spot, as the weaker rand makes it cheaper for visitors, mostly from Europe, to come and soak up the African sun.

On Wednesday, hours after the rand slid to its weakest against the U.S. dollar since 2008, Finance Minister Pravin Gordhan expressed concern that the currency, which lost a quarter of its value last year, was trading below fair value.

But he was quick to urge foreign currency earning industries such as tourism to seize the moment.

"Our challenge is whether we have a private sector that is agile enough to seize the opportunities presented by a weaker currency and use that to their advantage," he said.

The hospitality industry appears already to be on the same page, building on the boost from the 2010 soccer World Cup and outperforming traditional drivers of economic growth such as mining and manufacturing.

Tourist numbers have soared since the World Cup, suggesting visitors are not unduly worried by media coverage of the rapes, murders and violent township protests that blight Africa's biggest economy.

While firms such as carmaker BMW have abandoned plans to increase their local presence due to unstable labour relations, U.S. hotel group Marriott International is piling in to a country whose stunning mountains, beaches and wildlife parks draw more than 9 million tourists a year.

The New York-listed chain said last week it was buying South Africa's Protea Hospitality for 2 billion rand in a deal that will make it the largest hotel operator in the Middle East and Africa.

The investment is the latest good news for a sector that contributed 252 billion rand - approaching 10 percent of GDP - to South Africa's economy in 2011, the year after the World Cup. Mining contributes only about 6 percent to GDP.

MANDELA FACTOR

In 2012, a particularly turbulent year that included the police killing of 34 striking platinum miners, foreign arrivals jumped more than 10 percent to 9.2 million.

"I'm aware of South Africa's problems - the crime, the violence. You'd be a fool not to be," said 29-year-old American backpacker Jason Ashton during a visit to Cape Town's Table Mountain, his second trip to the country in seven years.

"But this is still a beautiful country with a fascinating history," he told Reuters, gazing out towards his next destination, Robben Island, where former president Nelson Mandela spent a large part of his 27 years in jail during the struggle to overturn white-minority rule.

Officials say tourist arrivals on the island have soared since the revered statesman died in December at the age of 95, triggering a wave of international goodwill for the country he led as the first black president from 1994 to 1999.

Robben Island and Table Mountain have cemented Cape Town's position as South Africa's undisputed tourism capital, with visitors to the 'Mother City' spending 15 billion rand in 2012, up from 12.4 billion in 2009.

"Cape Town's importance to Mandela, who made his first address there as a free man, will doubtless draw many visitors in the wake of his death," the New York Times said, placing the city at the very top of its "52 places to go in 2014" list.

"The country has transformed itself since Mandela's imprisonment, but there's still much to be done."

Most sightseers are from Britain, the United States and mainland Europe, although the old patterns are starting to change.

"So far, the outlook for 2013/2014 is positive, and we hope that the strong pound may bring us more visitors from the UK this season," said Cape Town Tourism chief executive Enver Duminy.

"But we are also seeing an increase in visitors from emerging markets such as Brazil, China and India."

"BEAUTIFUL DAY IN CAPE TOWN"

The most dramatic shift is a tripling since 2009 in visitor numbers from China, which pipped France into fourth place last year as a source of tourists to South Africa.

Arrivals from other emerging markets are also growing fast, in part because they withstood the global financial and economic crisis better than the 'old world', officials say.

Tourism supports one in 12 jobs in South Africa, and the government hopes it will increase its contribution to the economy to nearly 500 billion rand by the end of the decade, creating 225,000 new jobs in a country plagued by 25 percent unemployment.

Hollywood stars are helping advance that goal, with the likes of Meryl Streep, Taylor Swift, Jeff Bridges and Katie Holmes all joining the tourist trek to the country's shores and putting in a good word.

"Beautiful day in Cape Town," Holmes posted on Twitter late last year, attaching a picture of a bright blue African summer sky.

"Can't get over how beautiful it is here in South Africa."

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