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Apr 12 2011

Why Cape Town hotels are going bust

Published by at 9:32 am under More News,Opinion,South Africa

Do you have money tied up in a B&B, or boutique hotel under-performing due to disappointing foreign tourist numbers to SA? Here lies the source of all your problems:

http://www.fin24.com/Markets/Commodities/Supply-fears-bolster-commodities-20110411

In case you can’t bring two and two together, the world’s hunger for the stuff SA’s mining sector produces, is holding the rand at levels it should long have waved goodbye to. In turn, that makes SA a far-too-expensive destination for the average European tourist.

Important: the difficulties encountered by SA’s tourism industry has nothing (or very little) to do with the industry and the players in the industry. It has to do with the rand and the authorities responsible for managing its level, ie. the SA Reservebank and (indirectly) the SA government.

If the rand was a true reflector of inflation differentials between SA and Europe, then it would today have moved in a band between R12 and R13 per euro. Not R9,70.

The global hunger for commodities is killing off SA’s export economy and its tourism sector.

 

 

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