Travel bans knock R1bn off tourism revenue

BY BONNY FOURIE bronwyn.fourie@inl.co.za

Mass cancellations leave accommodation establishments empty over the holiday season

IT TOOK just two days for South Africa’s tourism and hospitality sector to lose more than R1 billion in travel bookings following the discovery of the Omicron Covid-19 variant and the subsequent implementation of international travel restrictions.

Owners of hotels, bed-and-breakfast establishments, Airbnb properties and even campsites now face a bleak summer, with most of their revenue wiped out, and support for more than 200 000 annual jobs gone.

These establishments had already been through a dreadful two years while the pandemic kept guests away, and just at the beginning of the holiday season they hoped would start some sort of revival, the country was hit with more international travel bans.

“We had high hopes of recovering some of the business that had been lost over the past 20 months,” says Rosemary Anderson, national chairperson of the Federated Hospitality Association of SA (Fedhasa).

“Accommodation establishments across the country were reporting high occupancies, with a good balance between domestic and international travellers over the festive season, and were starting to employ more staff to service the increase in demand for accommodation.”

But within just 48 hours of the UK red-listing South Africa, and other travel restrictions following the detection of the Omicron variant, the country’s tourism and hospitality sector lost over R1bn in bookings for December to March.

“A snap survey conducted among just over 600 members of Fedhasa and the Southern Africa Tourism Services Association, representing hospitality and the international inbound tourism private sector, respectively, revealed that if the travel bans remained in place, based on the cancellations to date, respondents would lose 78% of their previously expected business levels for the period December to March.

“This would support in order of 205 000 jobs annually.”

While tourism establishments across the country will all have been affected for the upcoming holidays, she says those with traditionally large international-source market bases, such as the Western Cape and safari areas such as Kruger National Park and Limpopo, would be particularly hard hit.

Grant Smee, property entrepreneur, investor, and managing director of Only Realty Group, says tourism accommodation providers had been counting on the return of overseas tourists to generate “desperately needed” income over the season.

“Areas like Cape Town had already started to see an influx of travellers from midNovember, particularly from Europe, and the outlook had been strong.

“Domestic bookings had also been strong, with many families keen to make up for the lost holiday of the previous year.”

While the impact of the rise in Covid cases on domestic travel is still unclear, the fourth wave predicted for this month is sure to see some locals choosing to play it safe and cancel their travel plans.

“I think accommodation providers in Cape Town, Durban, the Garden Route and game reserves in Mpumalanga and Limpopo will be most affected by the travel restrictions, as these are the areas most popular with international tourists.

“In terms of sectors, luxury accommodation providers will be hard hit as often these prices are geared towards foreigners with strong currencies and most locals cannot afford them.

“Big hotel chains will also take a significant knock, as they have an oversupply of rooms available, many of which have stood empty throughout the pandemic.”

Echoing this, FNB property economist John Loos says that, prior to the latest travel restrictions, hotels were in dire straits, and he believes next year will be “more of the same”.

“Unfortunately, they will have to live without a significant portion of foreign tourists and a large portion of business travel won’t come back either.”

Analysing hotel occupancy data from StatsSA, he says September saw only 26.7% of hotel space booked. And while this was better than figures from the height of the pandemic and lockdowns in September last year, which saw rates at only 15.2%, it was far off the 2019 September occupancies of 54.1%.

Loos says May is seasonally the weakest month of the year for tourism, and that figures pick up after that, so September is a “reasonably good month” for tourism establishments. This means the September data was a good indication of the struggles hotels are facing this year.

“These low figures are due to a combination of factors like losing business travel, the restriction on foreigners and the fact that locals are financially pressured. Not everyone is taking holidays like normal.”

Guest houses and lodgings have performed even worse than hotels over the past three years, with their occupancy figures being:

• September 2019: 32%,

• September 2020: 7.2%,

• September 2021: 19.1%.

However, their occupancy rates, he says, have been “declining noticeably since 2013”.

“As the economy stagnated, their occupancy rates declined. This accommodation type was under more pressure pre-lockdown than hotels.”

What is interesting though, Loos notes, is that campsites have been the strongest performers, and this could be because they are more affordable and, from a virus point of view, perhaps deemed safer.

Occupancy rates for camp sites have been:

• September 2019: 37.6%,

• September 2020: 21.1%,

• September 2021: 33.3%.

Loos says overall tourism accommodation income for B&Bs, guest houses, caravans and hotels was 56.9% higher than last year – obviously as heavier restrictions were in place last year – but that this income was 58.3% lower than in September 2019.

Accommodation establishments in and around the country’s game reserves will be among the hardest hit by the international travel restrictions this summer season. PICTURE: PIXABAY