What do Mark Twain, weddings and the South African economy have in common?

Niche tourism has high-growth potential

Walking around Stellenbosch, it is not too difficult to spot the tourists. Sometimes it’s even possible to identify their nationality based on their choice of shoes (or lack thereof: Germans tend to wear socks and sandals). But for all the irritation as they ask for directions or advice on the best wine farms, it is important to realise that these tourists are a lifeline for our economy. Many of us did not even realise that our jobs depended on tourists until Covid arrived and the tourists disappeared.

At 3.7%, tourism contributes more to our gross domestic product than agriculture, utilities or construction. More importantly, it is a labour-intensive sector. In a country desperately in need of creating jobs, the tourism sector employs guides, cooks, cleaners, and drivers, amongst others. Many of these jobs don’t need a tertiary degree. What is more, many of these jobs are not in the bustling metropoles of Johannesburg or Cape Town. Tourism is one of the least concentrated industries, both across firms and across geography. Tourists love experiencing South Africa’s rural splendour, which means some jobs are created far away from cities or heavy industries. Technology has helped to democratise the sector even more: websites like Airbnb and LekkeSlaap (a proudly South African platform) now allow anyone to open their homes to visitors, earning an income from what was essentially dead capital before.

But besides the direct economic benefits, tourists offer what economists like to call positive externalities. Foreigners meeting locals build networks across social and cultural divides; on a recent trip to the airport, my driver told me how he and his wife visited a former client in Norway, all expenses paid. As Mark Twain explained, traveling (or hosting travelers) expands our horizons: ‘Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts.’

So what can we do to grow the number of tourists visiting South Africa? Some obvious things apply to all visitors. Make it easy (and affordable) to get a visa. Have direct flights from as many cities as possible. A 2018 study published in the Quarterly Journal of Economics shows that direct connections increase capital flow from high-income to middle-income countries. Because Cape Town International has recently added several new destinations, expect firms in the Mother City to profit from these links. And, finally, a safe and secure visitor experience is paramount for many tourists.

But tourism is a broad church. Visitor preferences are diverse. The kind of top-down policies that politicians prefer – and that might be more relevant for concentrated sectors like heavy industry – are less applicable in tourism. Rather, it is up to entrepreneurs to find and fill these niche tourism gaps.

What are these gaps? There are many. Let’s take ‘dark tourism’, something I’d not heard of before reading Eben Proos and Johan Hattingh’s latest paper. Dark tourism is when tourists visit sites of death, disaster or depravity, like the 9/11 Memorial in New York or the Auschwitz concentration camp in Poland. Proos and Hattingh argue that the Free State could benefit from dark tourism by focusing on sites that commemorate the South African War of 1899-1902.

Another niche area is LGBT tourism. In a new paper, Nkosivile Madinga, Marlé van Eyk, and Feliz Amoah argue that South African tourist facilities can benefit from this untapped market, often by doing simple things, like integrating gender-neutral options on their registration form. Such actions signal to potential LGBT tourists that the destination is inclusive.

Meghan Muldoon and Heather Mair argue in their new paper that township tourism, another niche area, has the potential to not only boost economic opportunities but also provide opportunities for social justice. Residents in three Cape Town-area townships describe their encounters with tourists as helping to ‘polish the wounds of the past’, allowing them to be seen and heard.

Ultimately, though, only if we can combine South Africa’s environmental and cultural diversity with value will be able to attract the tourism numbers that can create jobs and grow incomes. A depreciating currency can help, but it is not enough. Take one niche area that has attracted surprisingly little attention, with one or two exceptions, from researchers and policymakers: weddings.

The figure shows wedding price comparisons between selected popular wedding destinations. Despite being one of the most expensive places in South Africa, the majestic Franschhoek valley is the fifth most affordable destination on the list. Clearly, South Africa has huge potential to attract more couples planning an unforgettable wedding experience.

South Africa’s attractions also offer opportunities for other service industries where destinations matter. We have world class private medical facilities and public universities. Medical safaris offer overseas patients the opportunities for high-quality medical procedures followed by a game reserve getaway. I teach several international students who find South Africa a great destination for tertiary education, both because of the high-quality education they receive (at affordable prices) and because of the wine tasting, and rock climbing, and shark cage diving, and all the things that would excite twentysomethings.

This list is likely to expand as work-from-home becomes more common. The Western Cape is already pushing for a remote working visa for all those digital nomads that now roam the globe in search of a fast internet connection, good coffee and a grammable lifestyle.

Instead of briskly walking past, the next time I spot a German tourist in Stellenbosch I’ll offer to take their picture. It is the least I can do to support our economy.

*An edited version of this article was first published on News24. Data by Codera Analytics. Photo by Ethan Smith on Unsplash.