By Jason Mellow, Head of MiWay Business Insurance
In South Africa, September marks the start of spring and Tourism Month. Flowers are in bloom, the chill of winter is almost a distant memory, so as locals plan their midweek breaks, weekend getaways as festive season approaches, what can tourism SME’s do to ensure they are taking advantage of the travel upsurge?
SMEs particularly affected were those who lacked the cash reserves to adapt quickly to the new conditions. Simply put, there are many who were unable to ride out the storm. This is particularly relevant as SMEs make up a substantial proportion of tourism service providers; in addition, economic planners look to SMEs to drive job creation.
But the good news is that while travel restrictions dented businesses in the tourism sector, there is still much ground to catch up – according to the Minister of Tourism, Lindiwe Sisulu, the industry is bouncing back.
In the January-June 2022 period, 15.2 million domestic trips were taken, an increase of 23.8% compared to the same period in 2021. International arrivals were up 147% for January to June 2022 as against 2021. Forward bookings increased by 328% in August. [i]
At tourism SMEs should look at the following areas to position themselves for success as the industry picks up:
- Be Agile. At this time, tourism SMEs should be looking for ways to make the most of the current upswing in tourism demand – for example, by taking advantage of the approaching summer travel season, and the forthcoming Christmas season. By adjusting pricing models and offering packages that match the local market’s desire for affordable getaways, SME owners could maximise profits and encourage both return visits as well as word-of-mouth marketing. This type of agility lends itself towards brand awareness and long-term sustainability
- Look at the data. Humans tend to over-emphasise experience and “gut feel” when making decisions. The technology revolution is making it possible to gather and process data more easily and cheaply, meaning that businesses can make decisions based on evidence. Data reveals real opportunities and suggests how they should be seized. South Africa’s SME tourism companies must learn how to translate data in the way in which they deliver their products and services, in line with tourism trends. For example, a business that understands what its customers really value can focus on those things, and avoid wasting money on others, while others might be able to spot a new opportunity opening up.
- Be prepared. Once the business owner has determined what opportunity he or she wants to target, it’s imperative to plan properly. Will more stock be necessary, or does a new resource need to be hired? For example, with more and more tourists seeking ‘one-stop-shop’ stays, research the most desired needs of travellers and plan for it, such as on-site children’s activities or pre-packed meals.
- Learn the lessons. During Lockdown, it was clear that the domestic tourism market was the only way to make money during much of 2020-21. Tourism SMEs should find innovative ways in which to keep in touch and stay connected with their domestic clients, whether it’s a birthday message or festive season greetings, stay connected to the ones who keep your doors open. Leveraging cost-efficient social media and other digital channels can be used to stay in touch with clients, and to reach prospects.
- Put the right insurance cover in place. Having appropriate cover in place is important if you want to mitigate the risk associated with any business endeavour. Cover should include not only your business premises and equipment, your vehicles and stock as well as any other risks related to your business. As the season picks up and the roads become busier and accommodation gets booked up, tourism businesses should make sure they have adequate cover.
For example, a company operating a lodge or other accommodation would require business property insurance and liability cover, as well as commercial vehicle insurance and liability cover if they are transporting guests. The latter insurance would also be required by a shuttle service. A car rental company would need motor traders cover and liability cover for vehicles while at or away from the dealership.
It is highly recommended that tourism operators consider broad-form liability cover, which protects the business and its employees against third-party claims, including claims related to poor service. Business-interruption insurance should also be considered.
At present, the road back to normalcy for South Africa’s tourism SMEs may not be a 100-meter dash, but what is important is getting back up and approaching every day you ‘open shop’ as the chance to start over. For us at MiWay, starting over with the right mix of local-is-lekker products, services and tourist experiences is how you do it right.
As South Africans, we are known for our resilience, innovation and gees (spirit) – we don’t simply take lemons and make lemonade, we’ll make lemon meringue pie too! In the current Sho’t Left local tourism upswing, local SMEs should be having their cake and eating it too!
MiWay is a licensed non-life insurer and Financial Services Provider (FSP 33970).
[i] SA Tourism bounces back with ‘hope on the horizon’ | The Citizen
