On average, South Africans spend 5 - 6% of their annual income on travel and despite rising costs, they keep travelling. Find out how your value-added service (VAS) business can tap into this robust travel ticketing market.
The latest SpendTrend24 report by Discovery Bank and VISA shows that travel in South Africa has stabilised following a surge during the post-COVID recovery phase. However, the cost of travel has risen, with Stats SA reporting a 5.7% increase in transportation prices as of April 2024.
Despite these rising costs, Stats SA reports an increase of 23.33% in South African travellers in 2023 with car, taxi, and bus travel being the most preferred mode of travel for domestic tourism. This trend shows a sustained demand for travel services, especially among those who can absorb the inflationary pressure. In addition, certain client segments, particularly higher-net-worth individuals, have increased their flight travel spending.
Leverage the travel ticketing trend
The travel ticketing trend presents an opportunity for your VAS portfolio for two reasons. Firstly, it presents an opportunity to add this service to your portfolio. This gives you the chance to earn margins on these high-value purchases and significantly increase your revenue from digital goods and services. Secondly, it provides a chance to strategically attract higher-net-worth individuals with your offerings. If you can offer these customers a superior user experience by providing a VAS that competitors don’t offer, you stand to increase your revenue. You could also win them over as regular purchasers of a range of digital goods and services from your portfolio.
Respond to consumer behaviour
By understanding how South Africans are currently spending on travel and what they value most, your business can tailor its offering to meet these travel ticketing demands. We’ll consider three areas: payment methods, customer experience, and reward programmes.
1. Accept their preferred payment methods
A recent Stitch Consumer Perspective Travel report surveyed 300 South Africans to determine their preferred payment methods for travel tickets. The results showed that debit and credit card payments were the most popular, while cash was the least preferred. Notably, digital wallet payments have seen a significant increase of 9%, with over 60% of South Africans now preferring this method, per SpendTrend24.
To streamline the booking process and attract a broader user base, offer a diverse range of payment options, including card, EFT, and digital wallet methods on your VAS platform, while considering both digital and physical channels. The flexibility allows consumers to pay how they want to while increasing the competitiveness of your portfolio.
2. Offering the best customer experience
Another way to ensure the best experience and win customer loyalty is to ensure your VAS platform is reliable and limits service downtime. Customers often choose to purchase tickets as a VAS for the convenience factor but if your service is unavailable or checkout is delayed, they will likely choose other platforms or competitors to make their purchases.
Having scalable software and infrastructure can help you provide an always-on service and keep customers returning.
3. Leverage reward programmes
The cost of travel is at an all-time high so South Africans are more price-conscious. Banks such as FNB and Discovery have used their reward programmes as incentives to drive ticket sales through their digital platforms. Including reward programmes in your VAS strategy will likely attract more engagement with your platform and provide more opportunities for consumers to transact with your business.
Look to strategic partnerships
Providing the best ticketing VAS offering to your customers can be successful by leveraging strategic partnerships to tailor it to their needs. Looking at air travel, the value proposition of your portfolio can appeal to cost-conscious consumers by partnering with airlines like FlySafair. For bus travel, operators such as Quickbus offer tickets from over 40 bus operators, offering a broader range of options for customers that value price comparisons.
The right technology partner will ensure that integrating with these operators is as seamless as possible and that adding new operators and options for your customers is quick and simple.
The potential for VAS travel ticketing in South Africa is driven by a resilient demand for travel despite rising costs. The integration of multiple providers or leveraging reward programmes incentivises purchases and boosts customer loyalty, while strategic partnerships for the right technology to power your service, with diverse payment options can increase market competitiveness.
Learn how Electrum can help you optimise your travel and event ticketing solution, or chat with us about how we can help you expand your VAS portfolio.
