South Africans woke up Tuesday to the news that the country has fallen into recession for the second time in eight years. This time, however, the recession comes on top of a recent decision by two major credit ratings agencies to downgrade the country to junk status.
The end result? The South African rand tanked on the international currency markets throughout the day. See the picture below to give you an idea.
But why is this relevant to Cruise Arabia & Africa? Well, for a start, all cruises bought by South African cruise passengers (even those sold by MSC Cruises SA departing Durban and Cape Town) are sold in dollars.
The prices may be quoted in rands, but they’re sold in dollars, because the US dollar is the international currency of the cruise industry, all provisions, port taxes etc are paid for by the cruise lines in dollars as well, no matter where they are in the world.
So this means that cruises are going to get more expensive. How much more expensive? Well, we reached out to all the major cruise travel agents in South Africa and the general consensus is that they don’t know, and can’t comment at this point on what they’ll do if they do if the Rand continues to plunge.
RELATED: History of cruising in South Africa
In 2015 when the currency was under-performing Imagine Cruising SA locked in its prices to prevent cruise fares becoming unacceptably expensive for South African’s.
South Africa’s cruise market has proven itself over the last several decades to be incredibly resilient though, with year-on-year growth in spite of any economic or political turmoil that comes the country’s way.
The plunge into recession has come sooner than most anticipated, but is not entirely unexpected and yet weeks ago, despite these warnings, MSC Cruises, the market leader in South Africa’s cruise sector, announced that it was upgrading its deployment out of Durban.
The cruise line is sending the much larger, newer and better-appointed MSC Musica to cruise roundtrip out of Durban in 2019 in a clear signal of MSC’s confidence in the stability of the South African cruise market.