A total of 43% of South African tourism businesses have already placed their staff on leave of absence and 50% have made staff redundant since the start of the global COVID-19 pandemic.
This is according to a survey conducted by the Department of Tourism in collaboration with the Tourism Business Council of South Africa (TBCSA) and the World Bank’s International Finance Corporation (IFC).
The ‘Tourism Industry Survey of South Africa: COVID-19’ – conducted in April this year and surveying around 1 600 respondents across the travel and tourism sector – indicated that more than 160 000 employees in tourism in South Africa may already have been affected by the global health crisis.
South Africa’s lockdown – now in its 47th day (May 12) – has curtailed the supply and demand side of the tourism market and, in essence, the lockdown has rendered the tourism sector totally inactive.
“In February 2020 – when COVID-19 had begun its spread across continents – 79% of businesses in the industry felt neutral or positive about the future of their business and tourism in the country,” said Tshifhiwa Tshivhengwa, CEO of TBCSA.
However, by April, 78% of tourism business felt negative about the future of the industry. “This is an unprecedented crisis for the tourism industry, with impact felt before lockdown and expected to last well beyond easing of restrictions,” he said, pointing out that unless steps were taken to support the industry, a major component of South Africa’s economy would close down and it would be a challenge to restart it.
More COVID casualties
The survey showed further that since the introduction of restrictions in the country, 69% of businesses have temporarily closed and 58% have applied significant downscaling.
This rises to 82% and 65% respectively for accommodation businesses, a sub-sector of the industry that has high capital investment levels and has a high fixed-cost component. The survey also indicates that 58% and 54% of businesses respectively could not cover debt repayments or fixed costs in March.
Longer-term confidence is also waning, with 51% of businesses having already cancelled planned upgrades, expansions or improvements. This rises to 65% of large businesses – where the larger investment projects that would have generated significant impacts and employment – are on hold.
“The current inability of businesses to cover costs is likely to lead to more business closures. This, together with the cancellation of planned investments, indicates a huge concern that there will be no supply, when tourism moves more fully towards recovery – which we hope will be during 2021,” said Chairman of TBCSA, Blacky Komani.
“Tourism is an important sector of our economy and we risk being unable to participate in what will be a competitive global industry when the recovery gains momentum.”
Tourism is a significant sector. It, directly and indirectly, supports 8.6% of South Africa’s GDP. Its economic activity encompasses all non-commuter passenger travel, car hire, a wide range of accommodation types, a vast array of activities and attractions, conference centres, retail and restaurants and services such as tour operators, travel agents, and conference and event organisers, amongst others.
The tourism supply chain touches on manufacturing, such as vehicles, linen, furniture crockery, cutlery and more, construction, other services such as banking, and agriculture, as millions of tourists consume locally produced food.