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How can SA expand its tourism footprint to accelerate recovery?

The lifting of Covid-19 restrictions today was a great moment for City Lodge Hotel Group. ‘We’ve been asking for a long time to see an easing of travel,’ says COO Lindiwe Sangweni-Siddo.

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FIFI PETERS: Today we had numbers coming out of Statistics South Africa. They were the tourism numbers for 2021. Just to give you a bit of detail as to what happened, we had around 3.1 million tourists coming to South Africa last year, mainly for holiday. This is a good number, but not the best number that we have seen. In fact, it’s a 30% drop from 2020. A small fraction of those people that came and visited us came for business; around 5.6% of them came for business, and a few of them came for work – as has always been the case. Most of the travellers and the tourists that do come to South Africa come from the continent, mainly the SADC region, and around 16% of travellers come from overseas.

But a lady who knows more about the tourism sector than I do is Lindiwe Sangweni-Siddo. She is the COO, the chief operating officer, at City Lodge Hotel Group, as well as the chair of the Tourism Transformation Council of South Africa.

Lindiwe, thanks so much for your time. The numbers that were released a little earlier by our national statistics are a bit behind, given the fact that that’s the picture that we saw in December 2021. We are now in June 2022. Can you give us a sense of whether things have improved since December, just by the amount of activity that you’ve seen in your sector at City Lodge or even as the chair of the Tourism Transformation Council?

LINDIWE SANGWENI-SIDDO: Good evening Fifi, and thank you so much. I’m really greatly honoured to be invited. The results that were released today by Stats SA in a 65-page document have been received very positively by the industry and at a high level. One hasn’t really studied it in depth, but at a high level what is really reported is that there continues to be an upward trajectory in terms of accommodation income and increased occupancy, particularly in the hotel and even in the bed-and-breakfast sector.

When it comes to City Lodge Hotel Group, we were very pleased on the 20th of this month [June 20] to issue a voluntary operational update and trading statement, where we were also really reporting on what we’ve seen in the last quarter. And so we are really seeing great improvements. For example, by the end of May we were reporting a 52% occupancy for South Africa and 49% for the group.

And if you compare – because we’re always interested in what’s happening in comparison to 2019 – for the first quarter of our financial period, 2019 was hitting a 55% occupancy, and we are getting closer to that. We are now at 44% at the end of the first quarter of the last financial year, January, February, March. So in summary, Fifi, we feel much more positive.

We see a rebound in the hospitality sector, and we also see that generally the economy is awakening. There’s renewed activity.

We’re happy to see the business side coming back because throughout Covid we were highly reliant on leisure business, or a hybrid of what we call the people who are travelling and working, as well as ‘the pleasure’ – what we call the business pleasure. It’s really lovely to see the conversion from the hard work that the entire industry put into ensuring that the domestic market continued throughout Covid to support us and came to the party with discounted rates. And even on discounted rates, we continued to see much more improved occupancy trends.

FIFI PETERS: Your statement said quite a lot. I was quite excited for you. Just declaring no conflict here, but I was quite excited that you’re making profits again. I think your shareholders will be quite excited about that news too. But today, Lindiwe, we also had, I think, kind of good news, relatively good news in the form of the Covid-19 restrictions, all of them being dropped, all of them being removed from the table. One of them, of course, was travel, being the issue around the vaccine certificates that had to be presented when entering South Africa. I mean, now that that has also gone off the table, do you think that that will even accelerate the improvement you are seeing in your sector a lot more?

LINDIWE SANGWENI-SIDDO: Absolutely, Fifi. The news that was announced today was received as a ‘Glory Halleluiah’ moment for us. We’ve been asking for a long time to see an easing of travel. It just makes it so much easier for especially international guests who we are wanting to see come back in a fuller return, to not have to worry about the vaccination certificate and easing of travel by not having to have the Covid restrictions. So we hope to see, and we expect to see actually, a so much more improved return of the international market, particularly from the summer period, July inwards, when the summer holidays start overseas.

We note the importance of the regional travel, which we’ve been highly dependent on, especially African travel. Pre-Covid we were receiving up to 75% of total arrivals into South Africa that came from the continent, so the easing of these restrictions certainly makes it much better.

We also expect to see sporting to come back, the ‘nice industry’ as we call it – the meetings, incentives, conferences and events coming back and allowing us to operate at fuller capacity, one hundred percent capacity, as opposed to some of the restrictions that were holding back the business.

City Lodge Hotel Group doesn’t necessarily have a lot of huge conferencing space, but when the country is eventing and having the big exhibitions, like what Hostex is going to do this coming weekend in the Sandton Convention Centre, it allows everybody to benefit. You know, there’s a greater movement along the value chain for all players in the tourism industry. So, for example, this Hostex hasn’t been around for two years and we’re delighted that the suppliers of the industry together with the industry players can come back and begin to meet and do what we used to do before Covid.

FIFI PETERS: One would also argue, or in fact, a lot of people are arguing – in fact practically everyone – that there’s a new challenge right now, and that challenge is inflation, and that everything is costing us a lot more to do. I’m wondering what that looks like in your industry. You’re talking about the fact that business travel is back, people are getting out, going out again. But the cost of travel has also become a lot more expensive. You look at your ticket price and I’d like to understand what’s happening with hotel prices and how you guys are stomaching higher costs right now.

LINDIWE SANGWENI-SIDDO: It’s certainly the increased inflation rate and high price of fuel – and of course the ongoing in conflict in Ukraine doesn’t help. It does create a challenge. I could say that when it comes to the City Lodge Hotel Group, having gone through the hardship of Covid, the first place that we had to look at was cost containment. We pride ourselves in any case of just always being very lean and slick when it comes to cost containment, but we were forced into a space where we had to be so creative, and we were wanting to keep really tight in terms of our cost containment.

But on the other side a much more dynamic pricing approach is something that we introduced during these last two years, where we look at supply and demand. I talked earlier on about discounted rates, but also when demand goes up we move our rates in a manner that is still attractive to our travellers and guests, but in a way that also enables us to enjoy the upside during high demand periods.

It does mean that we all need to be very conscious.

We learned how much the local and domestic markets meant to us, and we want to continue making [things] attractive for local and domestic travellers to keep travelling.

So we will continue to exercise the greatest caution in making sure that we don’t cut our noses to spite our faces when it comes to that.

The Competition Commission has been engaging with the airline industry, for example, to really weigh in on the cost containment or the management of prices, especially after the loss of Comair. We are cost-positive and we believe that the environment already has been injected with an extra bout of positivity today, especially with the lowering of the restrictions.

FIFI PETERS: All right, good to know, Lindiwe, and thanks much for your time. We’ll leave it there. Lindiwe Sangweni-Siddo is the COO of City Lodge Hotel Group and the chair of the Tourism Transformation Council of South Africa.

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