PROMINENT travel agency groups in South Africa have posted their first profitable month since the onslaught of COVID-19. Strong performance in August is not a full-scale recovery, but top retail executives say it is “significant” and a “definite turn in the right direction”.
August was a breakthrough month for the Flight Centre Travel Group, according to MD MEA, Andrew Stark, who confirmed that the business’s brands were collectively “back in the black”.
Stark was one of several retailers who red-flagged capacity shortages on key routes. “We can’t keep up with enquiries. It is not an arrogant position, but as each country comes back online, customers look to travel. Specifically on international routes, we’ve got less capacity than demand. We could probably fill a few extra aircraft if air capacity came back on certain routes.”
And Flight Centre is hiring again. “We’ve got 28 immediate vacancies,” said Stark, adding that about 250 CVs had been received for those positions so far.
He said the brand’s financial turnaround had been a huge achievement. “We are humbled by it after 18 months of consecutive losses,” he told Travel News.
Online travel agency FlightSite, operating under the Club Travel Group umbrella, is certainly on track. MD Rian Bornman reported: “FlightSite’s focus on blue-chip partnerships has proven resilient, with transaction volume exceeding 2019 levels in recent months in most parts of the business.”
While the XL Travel Group reported good recovery since August, driven mostly by leisure and SME corporate customers, XL’s Head of Innovation and Member Relations, Franz von Wielligh, offered a view of current conditions. “One must take into account that most travel retailers underwent massive cost-cutting interventions during the past 18 months and, therefore, a return to bottom-line profit could relate to a reduction in overall expenses.
“There has also been a revival in MICE business, which is a further driver of demand. Overall, things are looking bright. But it is still a long road to recovery.”
Large corporates still missing
Stark said leisure business had come back stronger and accounted for 52% of bookings currently. Among customers, there certainly was a sentiment of, “If I’m vaccinated, I can book”, he said.
“What is really encouraging, is the SME business,” he added. “When South Africa moved from level 3 to 2, it was like a tap was turned on. Level 2 is their ‘lever’.”
Club Travel experienced strong performance in August, according to CEO, Gary Mulder, who said September was following a similar trend.
Mulder hoped the UK would reopen to South Africans soon, and believed corporate companies were eager to get travelling. “The UK really is a big factor, both inbound and outbound. We also have some decent government accounts that have kept us busy, and people are growing more confident to book international itineraries, although lead times are very short.” He was one of several retailers who said they expected lead times could improve as vaccine roll-outs progressed.
Speaking of the corporate market, Mulder said corporate companies still needed face-to-face meetings with their clients and associates. “Corporates are more likely to go into their customer’s office before their own office. You can do business so much better when you see people physically!”
Both Club Travel and Flight Centre expect good demand for Thailand in the future. They also both foresee a great number of bookings for Mauritius for travel in November and December. Mulder predicts that European ski holidays will be in demand for 2022. “People want to get out and explore,” he said.
Club Travel has also taken on more staff. Although Mulder said it could take up to two years to rebuild to pre-COVID levels, his outlook was positive. “We are way past the worst of the pandemic. We are definitely seeing pent-up demand coming through. Are people spending more? It’s difficult to tell. They are spending, and they should have more disposable income to spend on travel. They are keen to get out.”
Asata welcomed the industry’s positive results and CEO Otto de Vries said the association would continue to lobby against South Africa’s UK red-list status. De Vries acknowledged that corporate travel remained suppressed but believed that more businesses would travel if they could. “Things are definitely moving in the right direction. It is early days, but there is positive sentiment.”
