South Africa’s Finance Minister Pravin Gordhan gave his National Budget Speech yesterday. Here, Danny Bryer, the Director of Sales, Marketing and Revenue Management at Protea Hotels, reflects on some of the aspects of the speech and how they affect the hospitality industry in SA.
Increase in fuel levies
The announcement of an increase in fuel levies is likely to impact the hospitality industry negatively because we expect that this, coupled with the current drought, will result in an increase in food prices flowing from transport becoming more expensive.
Having said this, chefs within the Protea Hotels business have already started planning for the possibility of rising input prices for food at hotels, with a view to limiting price increases for our guests. Their plans include using different cuts of meat, and using meat cuts in novel ways, as well as focusing on sourcing suppliers closer to the location of the hotels so that transport costs can be restricted.
Cuts in government spending
The cuts in government spending that were announced are to be welcomed. Protea Hotels is keen to engage with our government clients more closely about how they can structure their conferences in such a way as to continue organising quality events but at a lower cost. There are numerous ways of doing so: the selection of venues and menus, and shortening the time spent at a conference without necessarily cutting out important presentations, are just some ideas.
Personal income tax
The expected announcement of higher personal income tax rates was not made, which is welcomed by the hospitality industry. Increased rates would probably not harm the industry too much since our markets are traditionally those with larger disposable incomes. However, in the current environment, people may still have to tighten their belts and it may well be that we will see people choosing to reduce the length of their hotel stays to stretch disposable incomes, or that some will opt for slightly lower-priced accommodation, such as going from a 5-star to a 4-star hotel.
Protea Hotels is encouraged by Government’s recognition of the need to promote domestic tourism. The President’s announcement during his State of the Nation address about the allocation of R100 million a year for this is certainly welcome news. When locals visit South African tourist sites, it can only promote a culture of pride in our country and increase knowledge among the population about our history and our culture.
With the Rand particularly weak at the moment, it has become more difficult for South Africans to travel internationally and so we at Protea Hotels have already started encouraging locals to travel inside the country.