An analysis of the price competitiveness of South Africa as an international tourist destination

Thesis (M. Tech.) - Central University of Technology, Free State, 2006Since the earliest days, people have travelled. Not only was it time consuming, limited and only for the rich, but it was not necessarily a pleasure. Since those early days, travel and tourism has developed to such an extent that it has become one of the major industries in the world, providing the tourist with amongst others technologically advanced air transportation, luxury resorts and a variety of experiences and attractions at many different destinations. The major developments in air transportation have opened up many opportunities, but it has also placed most destinations within easy reach of the tourist, as most destinations have become more accessible. This automatically led to increased competitiveness between different destinations, both locally and internationally. Competitiveness of the destination may be based on a variety of contributing factors such as its scenic beauty, the variety of attractions offered, natural resources, the accessibility, the host population, availability and quality of infrastructure, diseases, flight availability and frequency, seasons and many other factors. However, a destination will never become the most popular or most visited one if the tourist cannot afford to visit it. Price undoubtedly plays a very important role in the decision-making process of the tourist when choosing a destination. The prices at any destination are influenced by a variety of internal and external factors which, in the end, has a direct influence of the actual travel cost of the tourist. This study focuses on South Africa’s price competitiveness as an international destination. The major travel components or products that an international tourist will spend money on during his/her visit to South Africa are international flights, accommodation, attractions and food and beverages. The prices of these components were compared to similar products of Thailand and Australia, which have previously been identified by SA Tourism as South Africa’s major competitors. The focus of the research is therefore on the expenditure patterns, price perceptions and the tourists’ perception of whether or not they perceived South Africa’s tourism products to be affordable, to offer value for money or not. Perceptions of departing international tourists who have already used these products were tested. Once established, an international travel price index and a hotel price index were formulated for South Africa, which may be used to monitor international tourist expenses. These indices may also be used as indicator of the affordability and price competitiveness of South Africa as a tourist destination. There is not one individual in South Africa that cannot, either by means of direct or indirect revenue, benefit from South Africa being a tourist destination of choice. The opportunities and possibilities created by foreign revenue spent are legio. Hence it comes as no surprise that tourism in South Africa has become the priority of many different role players such as government, commerce, product owners and private industries. As it is difficult for a destination to control the external environment, the destination’s focus should therefore rather be on the factors that it can control or influence to a certain extent. By ensuring that South Africa’s tourism products are competitively priced and offer value for money, one of the major factors that may hamper the growth of South Africa as a destination has been addressed. In economic challenging conditions, the tourist has become more value for money driven than before when choosing a destination. The focus of the research is therefore to establish if South Africa’s tourism product prices are regarded to provide value for money or not to international tourists. The research was divided into two parts: literature and empirical research. The population of this study was foreign tourists to South Africa that have completed their journey and who were questioned in the departure halls of Johannesburg’s Oliver Thambo and Cape Town International airports. An overview of the research results give a general indication that South African tourism products are more expensive than was anticipated by foreign tourists. Seventy five percent of respondents indicated that they paid more for accommodation, air transportation and attractions than they expected to pay. Of the different accommodation types used, the five star luxury hotel accommodations were found to be too expensive whilst other graded accommodation were perceived as being priced fairly, even cheaply. The paid attractions that the respondents visited were, with the exception of the Kruger National Park, all fairly priced. Cape Town was indicated as a city that was perceived to be more expensive that other cities visited by international tourists