Travelling when the Rand is weak

Despite a slight recovery in the Rand following the announcement of the repo rate hike last week, the South African Rand is currently at an all-time low. That leaves many wondering, where can we afford to go on holiday in 2016?

Moneybags journalist Jessica Anne Wood speaks to several travel industry players to see if they think travel is still affordable for South Africans, and where you can get the most value for your Rands.

 

Making it affordable

Tom Williams, chief operating officer of SafariNow, says: “The weak rand could force you to consider local alternatives to expensive international holidays. Discovering your new favourite spot three hours away and being able to regularly visit it is far better than finding it on the other side of the planet. South Africa is a country of different worlds with something for everyone; lush forests, cosmopolitan cities, world renowned beaches, extraordinary wild life, majestic mountains, rich cultural diversity and gastronomical delights to get started.”

However, if you are still want to travel abroad, Tanya Venter, a travel expert at Travel Counsellors, notes that there are a number of destinations where you get value for money, and where the Rand still has some value.

For example, she reveals that all inclusive holiday packages to Mauritius offer travellers value for money as there is no need to fork out cash for meals and other included expenses while on holiday. However, you will have to take your own spending money for souvenirs and any optional extras you may want to take advantage of.

Thailand, Bali, Vietnam and India still offer South Africans some value for the Rand, according to Venter, with the local food and transport being cost effective for tourists. (See currency conversions below)

While certain things may cost more with the Rand being weak against many foreign currencies that is not always a disadvantage. Venter notes that by trying to make your Rand go further, you may experience more as you try new places. To save costs on transport, you could also walk more, allowing you to meet the locals. Ask locals where you can find the best deals.

 

Tips for travelling with little money

Wouter Fourie, a financial planner, notes: “Travelling abroad has certainly become much more expensive in recent months and the consensus among financial planners is that the Rand will weaken further in the months ahead. This makes planning for an international trip a potential headache as you try to guess the way in which the currency will turn and try to book accommodation and flights at the cheapest possible rate.

“Keep in mind however that currency trading is one of the largest financial markets in the world, but with one of the lowest chances of making a success. It remains virtually impossible to guess the way a currency will trade, over the short term, and trying to do so may just take the pleasure out of the entire trip.”

With money being tight, especially when it comes to spending it overseas, we have some tips on how you can make your money go further.

  • Avoid hotels and restaurants: Venter suggests staying in guesthouses or self-catering apartments opposed to traditional hotels. This way you can also avoid the need to eat out at every meal and buy food from local shops, which may be cheaper.
  • Find the best airline deals: Shop around for the best flight deals. For example, Venter notes that Kenya Airways and Ethiopian Airlines offer good deals for flights to Thailand.
  • Be prepared to travel for longer: “When flying, try to plan your trip through indirect routes, as they often turn out to be cheaper. Also consider flying to a city’s lesser known airport, instead of the largest and most popular airport. This will keep costs down, as carriers try to attract people to these airports with lower fares,” suggests Fourie.
  • Be flexible: Travelling to France in the spring may be too expensive. Be flexible with your dates and you can save on costs. When the peak season is over airlines and hotels generally offer specials. For example, travelling to Phuket in October may be cheaper, as it is monsoon season.
  • Invest in a staycation: Staying at home, even if you venture out a little further up country is often more affordable than going overseas.
  • Plan in advance: “You’re more likely to make poor decisions if you’re in a rush. We see loads of customers booking their December breaks in January. Don’t get left with the leftovers to choose from,” advises Williams.

 

Fourie advises working out how much a trip will cost at the current exchange rate to see if you can afford it. While the price may change with changes in the exchange rate, it will provide you with an idea of the approximate cost.

Following this, you can try to pay for as money of the expenses as you can immediately to save money on early flight and accommodation bookings. “This eliminates the risks of future unplanned political or financial upheavals that can influence the currency and it mentally commits you to taking the holiday,” says Fourie.

He adds: “If you are planning a holiday well into the future (too far in the future to be able to book for it now), then you should repeat step one and then add a currency devaluation cost of seven percent per year. In simpler terms, add seven percent on the costs that you calculate today for every year or part thereof that you have to wait.

“The next step would be to plan for inflation cost. This means if you are travelling to a country where the inflation rate is four percent, then you have to add four percent to your annual cost escalation on top of the costs for currency devaluation. (i.e. 7% + 4% = 11%).”

 

Value of South African currency

The below table offers an estimate of what R1 can get you in a variety of foreign currencies, for those countries mentioned here, and more mainstream holiday destinations.

Currency Value of exchange for R1*
US Dollar 0.062
Thai Baht 2.22
Indonesian Rupiah (Bali) 854.19
Vietnamese Dong 1 386.49
Indian Rupee 4.23
UK Pound 0.043
Euro 0.057
Australian Dollar 0.088
Chinese Yuan 0.41
Hong Kong Dollar 0.48
Mauritian Rupee (Mauritius) 2.24
Turkish Lira 0.18
Icelandic Króna 8.07
Russian Ruble 4.92

 

*As at 12pm on 2 February 2016