38 finweek 19 March 2020 http://www.fin24.com/finweekPho
to:
Su
pp
lied
results. A turnaround at Bidvest’s car rental
division, among others, boosted the company’s
automotive unit’s trading profit in the six
months through 31 December.
“The enhancement of our technology has
been one of the areas that contributed to a
constant flow of bookings via direct source
channels within the leisure and inbound
markets,” says Paulette McGhee, CEO of
Bidvest Car Rental. “This has assisted in
improving our market share position, but we
remain the third-biggest car rental company
behind Avis and Europcar.”
Barloworld, in its full-year results to
30 September 2019, said it was able to
increase the rental rates at its Avis and Budget
businesses, but it was offset by shorter rental
periods. Motus, which was unbundled from
Imperial Holdings in November 2018, estimates
it has a 25% market share in local rental
vehicles, according to the group’s half-year
results for the period ending 31 December.
The valuation of these stocks is now at
attractive multiples (see table on p.37). It should
be noted that Allan Gray – a value investor –
increased its stake in City Lodge Hotels to more
than 10.2% from less than 6.8% following the
hotel group’s interim results release in February,
according to compulsory Companies Act filings
with the JSE.
Likewise, Cape Town-based Steyn Capital
Management increased its stake in Tsogo Sun
Hotels in December, a month after the hotel group
released its results for the six months ending
September 2019, Sens filings show.
Whether dividend payouts will continue from
the stocks exposed to the travel and tourism
industry remains to be seen. The big issue
weighing on these stocks is the global traveller
reaction to the coronavirus and how it will affect
offshore tourism arrivals to SA. ■
[email protected]cover story travel and tourism
Emphasis will be placed on increasing the total number of tourists entering the country
and the average amount of money spent by each tourist.
The ease of doing business, and the availability of appropriate levels of tourism
infrastructure – particularly transport, tourism offerings and products, and
accommodation – will play an important role in attracting different types of tourists.
Foreign business tourists arriving by air generate the most significant multipliers.
SA will be positioned as the business and shopping centre for the region. SA can do
more to develop the region as an international tourist destination by emphasising the
broader biodiversity, cultural diversity, scenic beauty and range of tourism products, and
making it easier for tourists to travel between countries in the region. A Schengen-type
visa for the region will be considered. ■Paulette McGhee
CEO of Bidvest Car Rental South Africans travelling locally and abroad comprise a sizeable market for local
tourism players to tap into.
As the outlook for the industry becomes increasingly hazy in 2020, one solution
may be convincing those locals who love to travel abroad to switch to local vacations.
“South Africans spend R80bn going overseas,” says Tshifhiwa Tshivhengwa,
CEO of the Tourism Business Council of SA. “We need local travel to sustain the local
industry,” adding that he wonders what would have happened if half the money
flowing out of SA could have stayed in the country to support the industry.
The subdued economic climate – with SA sinking into a recession during the final
quarter of last year – coupled with almost 30% of the labour force out of jobs, weighs
on locals wanting to travel and tour.
“In the absence of any real economic growth, we don’t expect overall market
demand to change significantly,” says Wrenelle Stander, group chief executive of
Comair (which operates the local British Airways franchise and kulula.com). “Even
with SAA reducing its presence in the domestic market, there is still overcapacity.”
Financial services firm PwC said in its Hotels Outlook 2019-2023 last year that a
“somewhat healthier economy will have a positive impact on domestic tourism”. That
was before the recessionary winds hit SA.
“We expect the recent trend in domestic travel to continue with a projected 4.7%
compound annual increase over the next five years,” the report stated. “The number
of domestic travellers will rise to an estimated 7.5m in 2023 from 5.97m in 2018.” ■South Africa’s local tourism market is huge. Will it be
the answer to boosting the sector as the number of
international tourists visiting our shores decreases?Is local tourism a remedy for
declining foreign visitors?
The National Development
Plan and tourismSOURCE: National Development Plan 2030The government plans to bolster tourism to South Africa
through the following measures: