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Slowing global economy impacts on tourism industry

by Michael Appel
on 28 Jul 2008
BuaNews Online
BuaNews Online

South Africa"s tourism industry, which relies on tourist spending, is feeling the pinch following rising fuel prices, changes in environmental policies and the global Gross Domestic Product (GDP) figure falling from 6.4 percent to below 4 percent this year.

Chief Executive Officer (CEO) of Pan-African Capital Holdings, Dr Iraj Abedian, on Monday said: "Key developments over the past year include falling global GDP, a dramatic rise in the fuel prices, and rising concerns for environmental sustainability and a reduction in carbon footprints."

Concerns over carbon emissions, or companies' efforts to become more environmentally conscious, have become a real concern and is affecting the tourism industry worldwide.

Speaking at a round table discussion on the changing economic environment, globally and domestically, and its effect on South Africa's tourism industry, Dr Abedian highlighted that changes in the global economy would effect long-haul travel the most.

"The dramatic rise in fuel costs has meant long-haul tourism is on the decline, particularly for middle income tourists, and domestically the same is true. In South Africa, long distance travelling will fall, but short distance travelling is likely to be less effected," said Dr Abedian.

Tourists are also becoming more and more environmentally conscious, and people will be willing to pay for establishments or companies who have a smaller carbon footprint.

This will ultimately have an effect on companies' profitability in the short-term as expensive alternative energies are employed.

"Sentiments [regarding environmental sustainability] are changing the fastest in countries that are vital as South Africa's tourist base.

"Tourism industries and services need to become more and more compliant, or else they will lose market share."

He advised company's which are behind to catch up and those that were not behind to stay that way.

"The responsibility to move to environmental sustainability is not purely on the shoulders of government or business, but it will take a collaborative effort," said Dr Abedian.

Regarding tourism's estimated employment creation contribution in 2007, tourism through direct or indirect activity, created 6.7 percent of new jobs in the country.

In 2002, however, tourism's employment creation was at its highest since 1994 contributing 7.8 percent of new jobs.

Dr Abedian said the reason for 2002 being such a good year for South Africa was because the Rand was at one of its worst levels making the country "dirt cheap" for foreigners, and terrorism attacks in the United States, Britain and Spain had driven tourists to comparably safer destinations.

Tourism has matured as an industry in South Africa, said Dr Abedian, adding domestic tourism remains the largest contributor to the economic value of tourism in South Africa.

"As a sustainable source of permanent job creation, income generation and social integration, tourism has much to offer, however, its full potential is yet to be realised," said Dr Abedian. - BuaNews


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