Business Insider Edition

A direct flight between Cape Town and the US is a start – now let’s not kill Airbnb please

Bruce Whitfield , Business Insider SA
 Apr 16, 2019, 11:18 AM
  • New regulation threatens small emerging tourism businesses and will entrench dominant, many foreign owned hotel groups.
  • As air access to SA improves, visitors want variety in their accommodation choices.
  • SA risks undermining the tourism sector – which can most quickly help alleviate the jobs crisis.
  • Visit Business Insider South Africa for more stories.

It’s taken nearly two years of negotiation, but Cape Town will finally get a direct flight to the US again.

US carrier United Airlines will make its first direct flight from New York to Cape Town in November this year, seeking to bring well-heeled American tourists directly to the city regularly touted as one of the premier holiday cities in the world.

United is the latest global carrier to fill the void left by SAA which, as the state-funded flag carrier, should be ensuring tourists can get to South Africa easily. But instead of OR Tambo and Cape Town International being awash with SAA-branded aircraft – the way Heathrow is by BA tail fins and Munich with the Lufthansa logo – local airports are awash with a fruit salad of carriers.

See also: Cape Town could finally be getting a direct flight to New York again this December – shaving four hours off travel time to the USA

That’s by no means a bad thing. It means foreign travellers, despite our best efforts to dissuade them with a toxic mix of being far away from their homes, generally having poor tourism infrastructure away from a few key sites, restrictive visa policies, and worries about crime, are still coming.

It just means SAA is failing to capitalise on the extraordinary opportunity other airlines have identified.

BA for example operates direct flights from the UK to Johannesburg, Cape Town, and more recently, Durban. Emirates dominates foreign arrivals to SA through its Middle Eastern hub and nowadays, if you want to get to Lisbon, there’s no cheaper way than going via Luanda on Angola’s National airline. Ditto for travelling to Italy on Ethiopian.

It’s a classic example of how a free market works. If there is demand, that demand will be satisfied by opportunists who step in when the chance to do so arises.

One example of this is the explosion of Airbnb in South Africa, which has proven a boon for small business growth, but a thorn in the side of the hotel trade which has successfully lobbied for the Department of Tourism to regulate the informal market.

It probably should have happened a long time ago, but the development of easy-to-use trusted platforms like Airbnb has led to a proliferation of start-ups.

“Airbnb killing tourism” read Sunday newspaper headlines. No it’s not. It may be undermining a moribund hotel sector which has long been ripe for disruption, but it’s hardly killing tourism.

Key arguments from hotel industry representatives is that they are held to far higher standards when it comes to the registration of businesses, safety, and cleanliness requirements than a person who simply invites paying guests into their homes.

While that may be true, the SA accommodation grading system leaves a lot to be desired in terms of accurately representing quality and the standards need to be simplified to be better applied and understood. Airbnb however offers a far more brutal self-regulatory mechanism: the court of public opinion. A rubbish Airbnb host whose sheets are dirty or whose property does not meet the advertised standard quickly finds bookings drying up. The incentive is to provide a great customer experience.

As for establishments not paying tax, well that is remedied easily enough. The SA Revenue Service simply needs to monitor bookings at a hundred or so Airbnbs over a three month period, say November to January, then pay a visit to busy establishments and demand records and check those against tax filings.

A quick press conference on the findings and the implications for transgressors would quickly rid the industry of fly-by-nighters.

The reality is that the hotels industry would be considerably less threatened if there was a higher volume of tourists coming to South Africa and staying for extended periods. When the size of the market shrinks or simply does not show its growth potential, that’s when the claws come out. Also, most Airbnb are local small businesses while firms like Marriott and Hilton are big players locally, and they are the ones who want protection.

Government now is falling into the trap of addressing the symptoms rather than the causes of the problem.

Bottom line, SA is competing against the world for tourists. We either make it easier and more affordable for them to come or we do what is happening now: put up even more barriers to an industry that has the potential to dent the country’s crippling unemployment crisis.

Give travellers affordable access to market and they will come.

Tell those travellers that they can’t stay at their chosen location because the establishment down the road hasn’t got its “fair share” of visitors this month and the incentive to shine disappears. Suddenly we'll regulate the South African experience to being average, and you can get that anywhere.

Regulate if you must, but don’t remove the incentive to shine.

Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.

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