South Africans are outnumbering international tourists in some of the country’s top tourism attractions. Given the impact of two years of pandemic restrictions, it comes as no surprise.
International travellers have been restricted from SA’s shores and the reverse case of costly quarantine protocols clipped cash-strapped South African travellers’ wings.
And while demand and occupancy are no respecters of nationality, pricing certainly weighs heavily in this regard.
South Africa has finally lifted the State of Disaster status put in place on 15 March 2020. Survival for South Africa’s tourism sector required heavy discounting and extreme flexibility over the past two years. As the slow-burn to recovery continues, it has reignited the debate about dual pricing.
Dual pricing and discounts for locals
Dual pricing is where you have a different rate for locals and/or SADC citizen as well as international tourists. SANParks already offers it across three tiers of Local, SADC and International. What could clearly be a competitive advantage to spur demand, sorely remains a point of debate. In fact, a point of contention for some.
Irrespective, for Tshifhiwa Tshivhengwa, Tourism Business Council of South Africa CEO it’s a crucial debate that needs to happen as the industry looks to get back to the pre-pandemic highs of 2019.
“We need to make sure we protect our domestic market, which is our bedrock.”
“A price is a product of supply and demand. Basic economics 101. But whatever we do, we cannot neglect the domestic market.
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Speaking to Secret Getaway about the reignition of tourism across all source markets, Tshivhengwa appears caught between this bedrock and a hard place.
As TBCSA, he is well aware he can only encourage the debate around dual pricing and not pronounce it as a policy.
Policy as set in terms of creating industry standards and health and safety protocols is one thing but directing these decisions when they are perceived to eat into profits or upset the international traveller apple cart is another story.
It’s a slippery slope.
How can local travellers benefit?
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“When we didn’t have international markets, we discounted our prices and effectively implemented dual pricing. The big question is if we want to build a culture of travel in this country, we may need to do that on a permanent basis,” says Tshivhengwa.
He firmly believes an equilibrium can be reached when it comes to pricing and the domestic market.
“We cannot have the division we had in the past of saying you can you only go to certain places if you have money," says Tshivhengwa.
Local travellers a pillar of strength
In December domestic tourism in Cape Town contributed R800m to the Cape Metro Economy alone.
This is according to City of Cape Town's Mayoral Committee Member James Vos who says the efforts of the city and its stakeholders paid off when borders and international passengers were restricted from travelling to South Africa at the end of 2021.
Vos confirmed that passenger volumes recorded at Cape Town International Airport for the period until March stands at 71% for domestic and 62% for international travellers.
The recovery rate for air traffic movements sits at 80% for domestic and 69% for international. “This translates into about 250 flight landings and take-offs per day, while we are processing about 25k passengers daily at Cape Town International Airport,” says Vos.
These figures are spurred by targeted campaigns and strategies, which “included packing and pricing discounts as part of the nimble measures to drive demand” he adds.
"The domestic tourism market has always been our pillar of strength. Affordability is going to be the cornerstone of how we position our local tourism market in the future. We are going to work with tourism businesses in Cape Town to look at clever ways to make it affordable but not to compromise on quality.
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Speaking to Secret Getaway at the launch of Cape Town Tourism's latest destination marketing campaign, CEO Enver Duminy agrees.
“What we’ve realised over the last two years is that a lot of South Africans have lost jobs. They are stressed. They also need a break away. And tourism becomes a great antidote for that,” says Duminy.
"South Africans can no longer prioritise travel if they are cash strapped. By offering discounts it's not about devaluing your product, says Duminy.
"It’s about saying I hear you, I feel you. When there are no international tourists, you need domestic travellers. So, for us it becomes a balancing act.
Duminy emphasises that the tourism industry has not generated proper revenue for the last two years, so it has to be "a give and take" to ensure there are benefits for discounted travel to stimulate domestic tourism.
Flexibility of a voucher-based system
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Tshivhengwa also believes the flexibility of a voucher-based system would make travel more accessible to South Africans.
He emphasises the potential of voucher travel as a solution at scale, saying “A voucher could mean an extra night, it could mean they could eat there. It could translate into many things and that’s why we really need to get into that space.”
Volatile global conditions
Duminy says the tourism industry is on “a journey of recovery and it is critically important for us to look after our domestic tourists.
"Not just because of Covid but as part of the sustainability of our destination for the years to come. The world over, successful destinations focus on the domestic traveller first, with international (travellers) being the cherry on top where you can get your yield.
"We continuously engage with local, provincial and national government to try and find ways to make travel more affordable and accessible, whether it’s reduction in aviation taxes as an example or rate rebates for a short time," says Duminy.
Similarly, Tshivhengwa adds that discussions are already underway with lending institutions who are investing significantly into the tourism sector to provide a discounted voucher system to get South Africans travelling more.
He believes this is one way to stimulate local demand, especially in light of volatile global conditions with the Russian-Ukraine war and the instability it is creating in Eastern Europe.
Tshivhengwa adds, “Who will be travelling if this whole thing spills over? We need to rely on ourselves to make sure we stimulate travel. Yes, we need new money coming from outside the country, but we got to encourage more people to travel and doing a voucher-based system could be one of those things to get more people to travel.
What 5-years of voucher-based travel data shows
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But not all voucher systems are created equal, according to Secret Getaway Co-Founder Andrea Britt.
“We have been privileged to spend five years assessing the South African market from an eCommerce retail vantage point, as well, assessing where the true pain points are in the travel industry specifically in light of marketing budgets and targeting the local traveller," says Britt.
“These pain points were always there, but COVID simply amplified and exposed those most vividly,” says Britt.
The route to faster recovery through international tourists must be balanced with the need to keep domestic travellers enticed with affordable offers, she adds.
Pricing Promotion as a strategic tool
Britt says that "dual pricing models are always a gauntlet between alienating international guests who can perceive the pricing model as lowering their perception of the product.
"Pricing models are not the same as Promotional Pricing campaigns which are short, sharp and focused on getting the market's attention back onto a product that they have perhaps overlooked or were totally unaware of.
"Campaigns should form the foundation of riding the waves of seasonal demand and not run homogeneously month after month, growing stale and boring, simply cluttering up the internet with more," suggests Britt.
"Pricing Promotion as a strategic tool used throughout the year offers a different advantage. The imperative with pricing promotions is that the inventory needs to be infinite and controlled, which is where we believe vouchers offer that control.
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Britt explains that a voucher-base system also funnels the exposure of a destination, buoying against too many bookings at the same time due to discounted rates.
The Secret Getaway voucher-based system as an example also allows the traveller flexibility to travel when they are ready and a greater degree of peace of mind with explicit T&Cs and tools that allow the traveller to self-manage their refunds or exchanges, says Britt.
Brave innovation
Duminy comments further on the need to be bold in marketing efforts to captivate travellers across the board saying, "We can't wait for others to make up their minds of looking after tourism, we need to do that ourselves.
"That’s what we’ve done with this Find Your Freedom campaign, which also has its own list of voucher offers.
"We need to be brave and innovative by not only building the pipeline for the next couple of months but we actually need to build a pipeline of future tourists for years to come."
Vos adds, "South Africa already has some fantastic examples of dual pricing without it being called dual pricing."
He also believes the issue needs to be unpacked carefully.
"Government has a number of assets from museums and nature parks and reserves, which should continue to carry a preferential tariff for South African citizens as those facilities and assets have been built with taxpayers money so it would make sense to expose locals to those types," says Vos.
He argues that it becomes more complex when addressing the same issue of dual pricing and affordability within the private sector as it impacts the bottom line.
"The City will be looking to partner with various private sector stakeholders to look at pricing but remains sensitive to the needs of tourism businesses who still "need to make a profit and take care of their employees and business costs."
Flexibility to spur recovery
All things considered, flexibility and its impact on demand within a sector desperate for recovery continues to be a major pressure. TBCSA has also noted 100% cancellation fees and policies that are not flexible to the current market environment.
Tshivhengwa further suggests that a “rotating voucher system, valid for six months or which lets the guest come back at any time” would yet again offer a solution.
"Stimulating demand as an industry, we need to make sure we instill some sort of flexibility when it comes to cancellation, especially now. There has to be flexibility.
“Let’s give back something," says Tshivhengwa.
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