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Tourism sector lost R164bn in spending by visitors in 2020

And the country lost close to a million jobs supported by the industry – BER.
Many of those who still have jobs in the sector now only work weekends because of the low demand. Image: Supplied

South Africa’s tourism sector lost an estimated R164 billion in spending by domestic and inbound visitors to the country in 2020 because of the Covid-19 pandemic.

The Bureau for Economic Research (BER) at the University of Stellenbosch said on Monday the number of jobs supported by South Africa’s tourism industry declined by 960 000 to 640 000 in 2020 from 1.6 million in 2018 as spending by domestic and inbound visitors slumped to R109 billion in 2020 from R273 billion in 2018.

It based the estimated expenditure by domestic and inbound visitors on the decline in visitor ratios and then applied it to 2018 tourist expenditure data, the most recent available data.

The bureau said internal tourism expenditure totalled R273 billion in 2018, with domestic spending representing the bulk of this spending at 56.1%.

Listen to Suren Naidoo’s interview with Tsogo Sun Hotels CEO Marcel von Aulock in this Property Pod (or read the highlights here):

Through spillovers into the rest of the economy, spending accounted for 7.2% or R385 billion of total GDP in 2018.

The BER further estimated that based on tourism expenditure in 2020, the sector’s contribution to GDP shrank to 2.9% in 2020 from 7.2% in 2018.

Knock-on effects

The bureau based the knock-on effects of loss in tourism expenditure to fewer travellers, resulting in less spending by domestic and inbound visitors and therefore a smaller contribution to GDP and fewer jobs supported by the industry.

“The tourism sector is without a doubt one of the industries that has been hardest hit by the Covid-19 pandemic,” it said.

The BER said the number of day trips in 2020 dropped by 54% compared to 2019 while overnight trips were 40% lower.

It said day trips to date this year are still 43.1% below 2019 levels and overnight trips 25% down.

The bureau said South Africa received 10.2 million international overnight visitors in 2019 but this dropped by 70% to 3.2 million in 2020 while the number of inbound visitors this year has remained low.

It said 75% of South Africa’s foreign visitors typically come from the Southern African Development Community (SADC).

“While fewer in numbers since the onset of the pandemic, the majority of our visitors still come from within the SADC region,” it said.

Accommodation income still way down

The BER said seasonally adjusted income from accommodation was still down 74% in July 2021 compared to July 2019, with income in July this year 53% lower than in June due to stricter lockdown regulations and the unrest in KwaZulu-Natal and Gauteng.

Average occupancy slumped to 16% in July this year from 46.6% in 2019, it said.

Tourism Business Council CEO Tshifhiwa Tshivhengwa said the World Travel and Tourism Council estimated that a total of 470 000 jobs out of a total 1.5 million jobs in the sector had been lost.

Tshivhengwa said the sector now has a situation where people are going to work but are not getting paid their normal pre-Covid-19 wage because the sector has not returned to normal.

“The majority of them work over the weekend only, because the demand is not that high and a lot of places are receiving tourists only over the weekend,” he said.

Tshivhengwa added that a few hotels have still not reopened because it makes no business sense to open these hotels until government officials and corporates are travelling again.

He said hardly any hotels had an average occupancy rate above 20% in 2020 and believes occupancy rates are currently lingering around 30% on average because many hotels closed during the lockdown in June this year, which would have greatly impacted vacancy rates.

In addition, he said leisure travel is insufficient to save the value chain and conferences and exhibitions and sporting events are not happening, which means fewer people are staying in different places.

Tshivhengwa said the hotel sector needs more people to be vaccinated, more restrictions being relaxed and a greater freedom for the citizens of the country because this will result in more people travelling.

Air routes critical

He said air routes are critical for the recovery of the sector, particularly those with China and India.

“Those two countries present a huge opportunity for South Africa but we don’t have any flights coming from those countries,” he said.

Tshivhengwa said South Africa has to work harder to get the country off the red list of many countries, which restricts travel to South Africa.

Read: Tourism bosses want SA off UK traveller ‘red list’ this week [Sep 14]

He wasn’t sure he could say without qualification that the worst of the Covid-19 impact is over for the sector.

“Until such time as we are able to vaccinate as many people as possible and hopefully we don’t get any [Covid-19] variants of concern, then we can’t say the worst may be over,” he said.

Insolvencies up

Statistics South Africa reported on Monday that the estimated number of total insolvencies increased by 129.7% in the three months to end-July 2021 compared with the corresponding period in 2020, with insolvencies increasing by 157.7% year-on-year in July 2021.

Read: North Coast’s iconic Fairmont Zimbali Hotel enters business rescue

Stats SA data shows there were a total of 286 compulsory and voluntary liquidations of companies and close corporations in the trade, catering and accommodation sector in the eight months to end-August 2021 compared to 333 in the corresponding period in 2020.

Looting and destruction

Federated Hospitality Association of Southern Africa (Fedhasa) national chair Rosemary Anderson said many tourism and hospitality companies simply could not hold on any longer when winter put a further dent on local tourism, with the riots in KwaZulu-Natal and Gauteng “putting a nail in the coffin for many involved in hospitality”.

Anderson said even if companies involved in hospitality were not directly negatively affected by the destruction and looting, consumers stopped going out during that turbulent week and several weeks afterwards.

“The looting and destruction had a massively negative effect on tourism and hospitality.

“It was like a tap had been turned off and many companies sadly simply could not hold on any longer,” she said.

However, Anderson said there is reason for hope now with the warmer weather, international airlines returning to South Africa, the improvement in the Covid-19 vaccine rollout and the removal of travel bans against South Africa in countries such as the Netherlands, France and Germany.

“All eyes are on the UK too this coming week, where hopefully at the beginning of October, South Africa will be removed from the red list.”

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Tourism is truly the success story of the government and it will recover. They created an annual R300 billion industry out of scratch and it rivals the resources industry.

However, some individuals believe, that because a few engineers are leaving for Australia/NZ that SA will not recover! Well, New Zealand can have Dr, Lauren Dickason.

So that’s why Mugarbage always flew to Spain or Singapore for medical treatment, because local Zim doctors were so great, eh?

Tourism a success story of Gavamunt ? I am shocked, did not know they have any success stories.

In the Recent Riots in KZN the ANC tried to destroy the Ocean….

The ANC looters destroyed a Chemical factory that spilled its contents into the sea….

Great Success for Tourism!

All, absolutely all the tourism infrastructure was built before 94, and the thanks needs to go to the previous regime.

The ANC just needs to concentrate on controlling corruption in its ranks and applying reciprocity to visa requirements for all nations, especially the EU UK and the US.

The natural reaction to an existential crisis would be to do everything to get more feet through the door. How a business does that, is to reduce its prices, so as to encourage demand for its product. Do we see this in the tourism industry? Have hotels and the owners of holiday flats brought down their prices to levels that locals who earn rands, can afford?

Go on to any booking website and see for yourself – the prices are still at the same gouging levels as before. I struggle to have too much sympathy for an industry which keeps on pricing locals out of the market.

I must say, you hit the nail on the head. It has become a feeding frenzy, with really crazy prices for accommodation. Unbelievable, First World prices in Africa.

Regarding the article, sorry about the job losses, great about the reduced tax income for cANCer.

Prices are barely above cost, if you check for specials. If you truly understood what a hotel needs per room night to break even then, and what rates are realised, then you would know your statement is false.

Nope. Logic dictates that even charging half price, is better than having nobody at all in your establishment. Your overhead costs don’t disappear if your rooms are empty.

@ Charou is correct also by reducing ones rate you run the risk of attracting low quality guests who end up costing you more on maintenance,housekeeping breakage/theft etc.

Its more cost effective to sell 5 rooms at R 2000 per night to the right customer then 10 rooms a R 1000 to the wrong customer

Also, and this is based on 20 year plus in luxury hotels, the guest who pays top rate is a more pleasurable and reasonable guest than the guest who is on a special- they tend to complain more and threaten with negative review if they are not getting something extra on top of there already discounted rate.

Since 75% of SA foreign tourists are from SADC, the easiest win here for everybody is to open unrestricted travel to vaccinated tourists from SADC.

Great comment. Denial across the board

“South Africa’s tourism sector lost an estimated R164 billion in spending by domestic and inbound visitors to the country in 2020 because of the Covid-19 pandemic.”

Please note that Covid-19 is just a really bad virus. It did not cause this massive loss in spending. The damage to this sector is a direct consequence of poor policy decisions by incompetent and power hungry politicians and their advisors. People did this – not a virus.

Who’d a thunk it? I’m shocked, shocked I tell you!

I have given up going on holiday in SA years ago. Accommodation is way over priced for what you get. Now that there aren’t any British tourists coming, the locals are good enough again. No thank you! I get more value for my money else where. Spent the whole of June at the black sea and enjoyed every second of it. Not seeing Cape Town any time soon. Already booked my next overseas trip for next year 🙂

So COVID has caused a complete pole-reversal in the tourism sector. People globally by necessity had stay-cations. They mostly loved them and that will be a mega-trend going forward. Forget SADC tourists, they bring in a pittance. Europe is our real tourism market (India and China are not backed up by the numbers, US tiny). To them SA competes with other long-haul destinations such as the Caribbean, Philippines, Brazil, Thailand, Aus etc etc. The recent ‘riots’ i.e. a national mini-coup, will deter many, many tourists who look to go further than a stay-cation. They pay a lot and spend hours in a plane to go long-haul. In the past we were probably a 6/10 attractive destination. We are probably a 3 now. Be interesting to see the stats over the next 5 years but that gap will probably never be filled again. PS my clients are trying to dispose of F&B / tourism assets like yesterday’s sour milk – NO ONE is buying. You can barely give the things away. A tsunami has gone through this industry in SA

harassing innocent beach goers….that’s the pits….wish somebody can invent a pill to permanently get rid of the smirks on Cele and Rhamaposas faces.

There is something very wrong with tourism economic model if it is highly dependent on foreigners. So South Africans don’t go on holiday don’t know about these places to visit and can’t afford these places. I know that 100 billion plus is not going to staff maybe only 0.000001%.

End of comments.

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