Is inbound incentive travel into South Africa on the mend?

Tes Proos, president of SITE Africa and founder of Crystal Events Africa, shares her and her colleagues’ views on the current state of the inbound incentive travel sector.

IS INBOUND INCENTIVE TRAVEL INTO SOUTH AFRICA ON THE MEND?

General reports indicate that incentive travel is alive and kicking within North America and Europe, while Asia is still struggling, especially as some destinations are still experiencing lockdowns.

East Africa appears to be rebounding very well, yet South Africa is still a question mark. Destination management companies are experiencing mixed reactions from various markets. Many of the groups currently travelling are Covid-19-related postponements. General feedback is that enquiries are coming in for travel from late Q1 (2023) and onwards.

According to Daryl Keywood, MD of Walthers DBS, “We are definitely seeing a return of incentive travel in the short term, with pre-Covid postponements and new business for 2022/3, but we are also hearing lots of concerns about the medium-term outlook.

STRAINED ECONOMIES ARE A CONCERN

He adds that inflation and recession concerns are also delaying decisions on incentive travel spend. Some companies did well during Covid (such as the pharmaceutical, financial services and insurance), while others haven’t fared so well (including automotive and construction). He adds, “In the UK, the bank rate rose from 1.25% to 1.75% (that’s a 40% increase) in August 2022, and much larger interest rate hikes are still expected this year. The US is experiencing similar inflationary trends.

“We are seeing great enquiries but also some caution as to how many will qualify and travel, even on incentive trips that we have already received deposits on.”

AIR TRAVEL OPPORTUNITIES AND THREATS

Peter-John Mitrovich, CEO of Grosvenor Tours, indicates that the most positive reaction currently is from the US market. Adding the fact that there will be three additional direct flights from the US to Cape Town by the end of 2022, there certainly are opportunities for incentive travel from the US to increase exponentially. In the meantime, radical increases in flight costs are not helping, nor is the chaos that reigns among UK and European airports due to lack of ground services. Losing one day on an incentive trip has a permanent knock-on effect and programmes cannot necessarily just be extended by a day. He adds that South Africa is not forgotten, it will just take longer to fully recover.

We are seeing great enquiries but also some caution as to how many will qualify and travel, even on incentive trips that we have already received deposits on.”

THE DESIRE IS THERE

Nick Buckland, co-founder of Into Africa, states, “We think the interest and desire for incentive travel is definitely there. We are seeing a good stream of enquiries – the challenge is getting these to convert. It isn’t always about budget, as some corporates have plenty to spend (left over from the Covid period).

“Long haul travel is often a challenge when it comes to the final decision, with European companies tending towards destinations closer to home. (We suspect global uncertainty plays a part here.)

“Flights – both availability and cost – are a concern. We need a carrier on the São Paulo–Johannesburg route again. A meeting request for Cape Town out of Egypt was declined because of the cost of the air travel.”

INDUSTRY PRICING AND SERVICE LEVELS ARE KEY

According to Michael Waller, CEO of Dragonfly Africa, clients are being surprisingly reasonable around contracting in the aftermath of Covid-19. He says, “As always, the market will dictate lodge and hotel pricing, but there is always a lag that is detrimental to the sector. So, to make it sustainable, suppliers need to go carefully with increases and not gouge now while the interest is high. Even if they think they will relook later, adding specials etc. to win back the market, this has a lag and the cost of that type of pricing versus consistent reasonable increases is costly in the long run.”

In conclusion, the rebound of incentive travel looks positive towards late 2023 and into 2024. In the meantime, industry-wide pricing and service levels remain a concern and should be addressed as a matter of urgency.

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