Byline: Daryl Keywood, MD of Walthers DBS and CEO of Authentic Travel Africa
Although we are seeing a surge of activity in terms of inbound incentive travel, we should remain cautious. Much of what we are experiencing is due to pent up demand in the form of postponed programmes finally travelling, and the real need for companies to bring their teams and channel partners together after two years of working remotely. Budgets have been high due to the lack of recent spend, however looking ahead there are a few potential roadblocks to navigate.
The economics at play
Certain industries strong on incentive travel, including medical/pharma, financial services, and construction/home improvement, posted good numbers during the pandemic. There are others that are however still struggling. A lack of stock due to supply chain issues mainly from China has impacted many manufacturers including the motor companies.
With inflation pressures and interest rate hikes already a reality, and with more to come, affordability will likely come into play for anything requiring finance. The interest rate portion of a mortgage has already increased by 40% in the UK and will likely double by year end. So, cars, homes and white goods may well see pressure on sales volumes and revenue in the coming year and probably longer. In South Africa we are used to interest rate hikes but for most of our major source markets in the Northern hemisphere credit has been cheap for many years.
Travel troubles
The situation in Ukraine continues to influence travel concerns in Europe and has an impact on food and energy costs and hence disposable income. The post pandemic airline chaos in Europe and the UK with cancelled flights and lost baggage is another real concern. Just as we need a boost to get over the pandemic years, we are now facing pressure, not only in terms of costs but also on the supply side.
For a long-haul destination like ours this means that getting to South Africa is becoming expensive and we urgently require increased competition to keep prices under control. Some recent practical examples are flight costs. A one-way economy ticket from Cape Town to Joburg hit R4 500 on a recent Friday, and that was if you could actually get on a flight with 90% of flights sold out.
RELATED: Air travel recovery – and its effect on incentive travel in SA
Looking to the future
It is certainly not an easy time to rebuild a business and those that do so successfully will need to be creative as many were during the pandemic. I don’t think we can just return to business as it was in Q1 of 2020. The incentive market is more competitive than ever and with costs increasing the business that is out there will be looking for savings as well as creativity.
Having all your eggs in one basket is not a good idea and alternate revenue streams should be considered. We can learn from the incentive houses, many of whom offer non travel rewards in addition to incentive travel. This area of business grew during the pandemic and helped those businesses to survive.
Whilst the medium term may be uncertain, we should long term see a strong revival once a few roadblocks are pushed out of the way. We have an incredible destination, offering great value and unparalleled experiences. Our source markets are fed up with overcrowded local and regional offerings and as soon as stability returns will be desperate to visit.
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About the author
Daryl Keywood is the managing director of Walthers Destination Business Solutions Africa, an award-winning tourism business with a strong focus on incentives and conferences in sub-Saharan Africa.
He is also a past President of SITE South Africa (2009-2012) and past Director of SITE Global (2015-2020).
Cover image by Kyle Glenn
