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Hotel occupancies collapse to almost zero

Income down nearly 99% for hotels, guest houses and other rooms for hire.
Demand for accommodation all but vanished overnight, with little sign of recovery in sight. Image: Supplied

It comes as no surprise that Statistics SA’s survey of tourism accommodation covering April and May found that the number of bed nights sold fell to just about zero: tourism has effectively been outlawed since the last week of March.

However, the monetary value of lost revenue is astounding. According to the report, income generated by hotels, guest houses and B&B establishments fell by nearly 99%. Nearly R3.8 billion in revenue was lost in only two months.

The report shows that in April revenue from bed nights sold fell from R1.99 billion a year ago to just R37.9 million. In May it fell from R1.75 billion last year to R26.8 million this year.

Read:

Stats SA comes to the obvious conclusion in its report that: “The Covid-19 pandemic and lockdown regulations since March 27 have had an extensive impact on economic activity. Measured in nominal terms, total income for the tourist accommodation industry decreased by 98% in May 2020 compared with May 2019.

“Income from accommodation decreased by 98.5% year-on-year in May 2020, the result of a 98% decrease in the number of stay unit nights sold and a 24.2% decrease in the average income per stay unit night sold,” say the researchers.

Foreigners first

Problems had already begun in March, probably due to a decline in the number of foreign tourists visiting SA. Figures show that bookings declined some 39% as measured by bed nights sold and income from accommodation was already nearly 42% lower than in March 2019.

Read: Small-town tourism knocked

Occupancy rates in any conceivable type of accommodation, from hotels to guest houses, fell to only 1%.

Occupancy levels in caravan parks and camping sites fell to zero as national parks and private reserves and resorts were closed at the end of March.

The total loss of revenue in the three months from March to May exceeds R4.6 billion compared with the same three months last year. It does not take a doctorate in mathematics or statistics to forecast that income for June and July will probably also be close to 100% lower than usual.

A quick calculation shows that the tourism industry is set to lose out on more than R7.5 billion on accommodation alone from March to July, with little indication that the next few months will be much better.

The decline in revenue has and will continue to have an impact on tax revenues too. Value-added tax payments are set to be down more than R1.1 billion in the period March to July compared with 2019, while income tax on profits and employees’ salaries will evaporate as well.

Distressing impact on jobs

The impact of the decline in tourism on employment is equally distressing.

Tourism is regarded as one of the most important industries in SA for growing the economy and reducing unemployment, as it involves a lot of small businesses and independent operators.

The Department of Tourism states that tourism has an important role to play in placing the economy on a sustainable inclusive growth trajectory, describing it as the “new gold” for SA. “It is a sector that is thriving and that has tremendous potential for further growth and for the creation of much-needed jobs.

“The National Development Plan recognises tourism as one of the main drivers of employment and economic growth,” said the department only 12 months ago.

It then estimated that the direct and indirect contribution of the tourism sector to the economy’s GDP exceeded 8% in 2018 which, it said, is an indication of the strong economic links to the demand and supply side the sector has with other sectors of the economy.

The department indicates that the tourism industry employed at least 700 000 people in 2018 and that more than 9% of all jobs in SA can be linked to the tourism industry.

That was before the pandemic struck. How many are still employed is anybody’s guess.

Little sign of reprieve

There is no indication of when the tourism sector will be allowed to open. And that critical factor will be only part of the battle; whether people will be willing to travel, and have the money to do so, remains to be seen.

Government has indicated that hotels will only be allowed to reopen during Alert Level 1 of the lockdown. Most of the large hotels groups have been shut since the end of March.

Read: Domestic leisure travel ban raises ire of tourism industry

City Lodge, popular among business travellers, announced at the beginning of June that it has opened a few of its hotels to offer accommodation for essential service travellers and that two have been opened to serve as quarantine centres. Another 21 hotels have been opened to accommodate stranded travellers. More than 60% of City Lodge’s hotels are currently still closed. The share price has dropped from R72 at the beginning of January to the current R18.

Sun International was also forced to close its hotels in SA – all of them, from March 26 – and has closed most of its operations around the world at different dates and for different periods. Most hotels in SA are still closed, but limited gambling operations have been allowed.

Sun International was struggling to show decent returns before Covid-19 and had to approach shareholders for new capital. It announced a rights issue to raise R1.2 billion at R9.44 per share, compared with a share price of R40 at the beginning of the year.

Listen to Nompu Siziba’s interview with TBCSA CEO Tshifhiwa Tshivhengwa:

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COMMENTS   15

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Did anybody expect a different outcome ?

A hotel or airbnb stay with your family is more dangerous than along range trip in a taxi?

And open toed shoes are a vector for transmission of the virus?

Too much garbage here, except that killing the tourism industry is also killing the millions who depend on it.

All brought to you by our wonderful government.

History will judge the ANC for:
1) Corruption
2) Cadre deployment
3) Covid-19 response
4) Aids medicine response

Agree, they will be judged however never CONVICTED, there will never be any accountability for this lot

Sadly yes. Unaccountable, untouchable and un-convictable.

Even if they open it now fully with inter provincial, international travel and serve alcohol they will probably still go bust.

Your wonderful ANC government does not seem to realize this. They will wake up when the horse is long gone. Childlike simplicity in thinking.

So what’s the governments recovery plan??? On the job trainees!!!

Cyril said it the other day. The youth need to find self employment.

That’s the plan.

And they are too. The number of beggars at robots seems to have doubled

Open up international travel/tourism. Didn’t they used to say for every 5 tourists 1 job is created, something on those lines?

No one is going to travel under the present circumstances.

Maybe there should be a swop between Ministers of Tourism and Transport. Put the Hon. Mbalula in charge of Tourism and lets see if shouts as loud as he did for the Taxi industry (which is classified as an Industry much like tourism!!).
But one day soon these overloaded Taxi Lords are going to find no patrons to ferry around as most of RSA Inc will go bust.
And the ANC cannot see that the day of reckoning/bankruptcy is looming ever so large on the horizon.

The hospitality industry has it better than the oil industry where the price went negative once. Imagine being paid to stay in a 7 star Sandton larney plek.

…and the lack of Income Tax revenue from this entire industry (as sad as things are) WILL BITE Govt in the buttocks.

And yet Govt can’t stop splurging….a new Basic Income Grant is proposed; SAA must be funded (aka bailed out), etc.

SA sovereign investment rating should be around the ‘CC’ or ‘C’ level…

Drop your prices! Maybe that will help.

/how exactly is dropping their prices going to get government to lift the restrictions ?

End of comments.

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