Lockdown causes ‘total devastation’ to tourism & hospitality

Most industries will return to work in June, but this sector, which employs over 700 000 people directly and twice that amount indirectly, sees no end in sight.
The Tourism Business Council has pencilled in December 2020 for when the country will move to lockdown Level 2. Image: Laurel Chor, Getty Images

With the country gearing to ease lockdown restrictions even further, one industry getting left behind is the tourism and hospitality sector. 

According to Statistics South Africa’s Tourism Satellite Account released in 2019, the sector directly employed 740 000 in 2018. The World Travel & Tourism Council report says in 2018 the sector contributed 2.8% of the country’s real GDP while its indirect contribution accounted for 8.2% of GDP. 

When SA implemented a hard nationwide lockdown in March calling for strict physical distancing and limited economic activity the sector which involves, travel, accommodation, conference centres, restaurants, bars and other leisure activities, was brought to a standstill. 

Much of the industry will remain so as the country moves to Level 3 in June in order to “maintain social distancing” said President Cyril Ramaphosa in a televised national briefing on Sunday

‘Total devastation’

In April the International Finance Corporation together with the Department of Tourism and the Tourism Business Council of South Africa released the first of three surveys looking at the impact of Covid-19 on businesses in the sector. 

Among 1 610 respondents, 99% of the firms said they had been negatively affected as 58% were unable to service their debts and 54% could not cover their fixed costs in March. 

When it comes to employees 50% of the respondents had reduced staff wages, 32% had placed workers on a leave of absence and 11% have made their workers redundant. 

“A total devastation,” said Lee Zama, chief executive of the Federated Hospitality Association of Southern Africa in describing how the virus has impacted the industry. 

Apart from a few hotels that have been enlisted by the government to provide quarantine facilities the industry was completely closed down Zama explained. 

Read: Minister asks tourism to be creative post Covid-19

“Our members have lost a lot of money, there are very few small businesses that would have a buffer for four or five months without any income,” she said. 

“It’s just impossible.” 

Ramaphosa said the government would consider the proposals that have been made by the tourism, hotel and restaurant industry regarding the health and safety measures they will put in place when they are permitted to open but gave no definitive timeline on when that will be.

According to the government’s five-level risk framework, activities in the tourism and hospitality sector largely fall under alert Levels 2 and 1, where there is a reduced chance of infection. 

“There’s an unfortunate understanding that the tourism industry is the one that brought the virus and is responsible for distributing it around South Africa,” said Zama. 

Zama said the sector should be opened further because the extension of the restrictions beyond the current moment would “result in an even bigger demise of the sector” requiring an even longer recovery period.

“Like any segment of the economy, we are aware of the virus and the economic impacts thereof and we will put sufficient safety mechanisms [in place] to protect our employees, our guests and the country,” she said.

Signs of recovery may only be seen two years from now, said Zama, when taking into account that only business travel and accommodation will only be allowed in June. 

Bleak 

“I personally don’t see a future for most of my business,” said Randolf Jorberg, chief executive of bar chain Beerhouse and founder of Hospitality Leadership, an interest group consisting of the founders and directors of restaurant and hospitality companies. 

“No one can change the fundamental issue which is restaurants have no way to make up the loss of income during this period,” said Jorberg, explaining that while some industries may be able to claw back some of the losses made during the lockdown, for a restaurant, a seat that is not sold today “cannot be sold twice tomorrow”. 

Jorberg said contrary to popular belief, restaurants by their nature are not “super-profitable” and rely on cash flow because the business has a lot of running and fixed costs, which is why the ones that don’t succeed at attracting customers close after a year or two. 

Read: Strategies Africa’s tourism requires to manage blow from coronavirus

“The reality is that due to no income for such a long period you will now see the death of restaurants of all sizes at a massively accelerated speed,” he said. 

This is because even though the businesses have been closed, costs such as rent and levies continue to accumulate. Jorberg said many businesses that might reopen for sit-downs will close in a few weeks as they don’t have enough cash flow because traffic will be slow due to fear.

Over the past two months the country has been in Levels 5 and 4 of lockdown, where the sale of alcohol was not permitted. In May restaurants were allowed to deliver food under Level 4.

This was cold comfort for Jorberg who said as a late-night operation the focus of his business is not food and 80% of the turnover “is in the liquid”. 

“The mission of my business was beer connecting people and the very mission of the virus is the opposite of that,” he said. 

Beerhouse has a restaurant on Cape Town’s popular Long Street and another in Tyger Valley. 

Jorberg said they will reopen the Tyger Valley restaurant as a delivery-only shop and start virtual restaurants under the brands Pizzahouse and Burgerhouse. 

“That’s the one attempt to rescue some turnover and generate some employment.” 

Before Covid-19, Beerhouse employed some 100 people on a full-time basis. Under its new structure, Jorberg said they will possibly hire some kitchen staff and drivers on a casual basis. 

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If tourism employs 700K people directly and twice as much indirectly, that’s 2,1m people. Throw in their dependents and that’s about 10m people impacted.

I seem to recall Pravin in convulsions over 5000 jobs at SAA, but maybe that’s only because it’s an SOE. Hence no bailouts for tourism and restaurants.

There has to be a way to open up this vital sector and we need to find it urgently.

This is not just an SA problem,even if government and all parties involved do all they can and if the lockdown is completely dismissed from our side , tourists from outside SA will still not be able to come to SA for at least the next 6 months due to their own countries restrictions?

People are over-estimating the effect of the lockdown, and under-estimating the self-preservation instinct. Currently, there is a lot of bravado on the social media streets, particularly from the over-45 Facebook contingent who can’t understand risk in an abstract sense, but this will vanish rapidly when people start dying in large numbers, as they did in New York, and are doing in Brazil. At that point, SA could go to Level 0, and very few will risk their lives for a steak or a pizza in a restaurant.

Landlords, restaurants, hotels and banks should have come to an understanding, possibly brokered by government, to hibernate the sector, but that may have been a bridge too far for the cadres’ imaginations.

Correct. There is no conscience with many people.

Old people the worst.

Self preservation. That is what it is all about at this stage. The thinking person don’t need lockdown rules, we have bunkered down and we are not going anywhere.

Absolutely. Old people are now realising how little they have to offer and what a legacy Bill they have left for their kids and grandkids to pay.

It’s not just the older people who are bamboozled by abstract numbers. New York has reached 23000 deaths and is in rapid decline now. In the same time more than double the people have died of heart disease and cancer (and thats not even factoring in that Corona gets counted twice as a co-morbidity in some of those cases)

If SA spikes similarly then you are still going to be at greater risk of getting killed in your car, or even being murdered, than be Corona. If you are wanting to apply this abstract sense equally you shouldn’t drive or go outside as they both present the same death risks as the pandemic at its height.

There is someone being bamboozled, but it isn’t me

Deaths per 100,000 population from covid-19 in
United Kingdom: 55.84
Italy: 54.53
France: 42.59
Spain: 58.04
Belgium: 81.72
Sweden: 40.51
(Source: Johns Hopkins)

Deaths per 100,000 population for South Africa from homicide: 35.2
Deaths per 100,000 population for South Africa from traffic accidents: 25.1

Your claim that the risk of being killed in your car or being murdered is more than the risk of dying of coronavirus “at its height” is therefore incorrect.

You are right, but I have realised that very few people understand the relatively of various risk factors. Very few people understand the concept of correlation, risk and relativity, and I not even referring the Einstein’s theory. Most people contribute an equal risk to everything and then they fear the situation that is dramatised by the media. People don’t mind to be buried but they don’t want to be cremated because that is too hot. They are comfortable in their car or taxi, but they fear air travel. They fear covid but they ignore the much larger and imminent risk of TB, Aids, malaria and diabetes because the media hype leads them to believe that covid is worse than the common flue.

We are at the mercy of voters and leaders who have zero understanding of the facts and circumstances that determine their wellbeing and their future. That is why they implement myopic and populist strategies to address the real threat of unemployment and poverty. They exacerbate the issues that they are trying to solve because they are totally clueless about the economic drivers that lead to either poverty or to material prosperity.

With such consciousness and understanding there is not a way for this nation to escape the predictions that Frederic Bastiat made in the year 1849 and is particularly valid for the effect of lockdown in South Africa at the moment:

“When misguided public opinion honours what is despicable and despises what is honourable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns it’s back on progress and can be restored only by the terrible lessons of catastrophe.”

New York’s mortality rate (estimated by Worldometers) is 279 deaths per 100,000. Which is 8 times higher than South Africa’s murder rate.

DSS, thank you for the stats.

The interesting thing is that Sweden, that did not implement lockdown, according to the stats you provided, has less covid deaths per capita, than the countries that did. You have provided indisputable proof that lockdown is a misconceived strategy.

That brings us to the point – What purpose does lockdown measures serve? The road to hell is paved with good intention…… and ignorance. The WHO is a very dangerous organisation, and a bigger threat than North Korea. The WHO has unleashed the biggest health disaster on earth by advocating lockdown measures. Developing nations will bear the brunt of this disaster.

Sensei, Sweden has performed much worse than other Nordic countries, which did lock down, and provide a better point of comparison, if you want to debate lockdowns.

Mortality rate per 100,000 population:
Sweden: 40.51 (no lockdown)
versus-
Denmark: 9.71 (lockdown)
Norway: 4.42 (lockdown)
Finland: 5.65 (lockdown)

(Source: Johns Hopkins)

Buddy add your murder rate and traffic death rate together and what do you get? Blow me down, a higher risk of being killed by either a car or a murderer in SA than even the worst hit Corona countries. (which we are nowhere near) have a look at the cancer and heart disease deaths and you realize it’s silly to be terrified of corona

Good luck in your bunker bud

The mortality rates of the countries in your list are very unlikely to be reflected in South Africa.
It is well established that age is a major factor in susceptibility to the virus

Deaths per 100,000 population from covid-19 in
United Kingdom: 55.84 – Average age 40
Italy: 54.53 – Average age 47
France: 42.59 – Average age 43
Spain: 58.04 – Average age 43
Belgium: 81.72 – Average age 41
Sweden: 40.51 – Average age 41
South Africa – Average age 26
As at 28 May, South Africa has reported 552 Covid deaths, of which only 4 have been people under the age of 30.
European mortality rates are not relevant to us

Old people too old to understand that the death rates are low BECAUSE of the lockdown.

Additionally, this is in ADDITION TO not INSTEAD of TB/Malaria/Aids/Cancer. Your countries poor health means the virus should be taken MORE seriously, NOT less – because the majority of your country has poor health.

Even if they open now. Not many people will go. So why wait?

No logic with this lot man.

I agree, there’s no point in keeping them closed. If schools and Church’s (under 50 people of course) can now re-open why not a hotel, resort or restaurant with adequate measures in place?

People are gatvol of the lockdown and I think the uptake in people visiting restaurants or resorts might be a lot quicker when they reopen. Sure there will be others who are still nervous and less inclined to travel, eat out etc so it won’t be a full recovery, but it might just surprise us.

Of course the other side of it is who has got money to travel or eat out now?

A restaurant or hotel running at half capacity is a cash eating machine.

What were the benefits of lockdown? I see none. The largest percentage of society will be infected by now and 90% will show no symptoms. TB and drug-resistant TB is highly contagious and deadly if not treated. Seventy per cent of people who are infected with drug-resistant TB will die. We have been living a normal life amongst this risk factor forever. Here we are, locked down, our economy in tatters, people unemployed and destitute, for a threat that is similar to the flue and much less dangerous than TB. Lockdown serves no purpose at all, but it does cause immense harm to society.

People need to feed themselves through employment. They need to exchange their labour for food and shelter daily. The government banned this trade under lockdown, thereby condemning people to economic ruin and starvation.

Lockdown was a major error and a disaster of epic proportions. It is another failure of Central Planning. The correct path would have been to allow people to take responsibility for their actions, for they are the ones who have to live with the consequences anyway. The Central Planners made a decision and enforced it on society while they have their cushy government salaries and housing. They implement draconian and destructive measures without any accountability or repercussions to themselves. In true communalist fashion, the accountability and the unemployment and hunger lies with the “collective” now.

100% agree. Look how silly the whole thing is…6 weeks ago you are going to die if you go to a church service. Now when the pandemic is about to peak, it’s suddenly okay.

How much sense does anything about the lockdowns make?

So what if it is larger? SA already has the world’s largest programs in response to AIDs and TB.

You realise this in ADDITION to and not INSTEAD of TB.
You have a poor health care system with the majority of your populations with diseases that would be considered comorbidities. You need to get in touch with reality and realise this makes you MORE at risk.

‘You must be ANC’ is just utterly pathetic. You really can’t make a rational point instead of resorting to childish off topic quotes and cute accusations.

You realise this in ADDITION to and not INSTEAD of TB right? Have you not seen the billions spent on TB and AIDs in the last few decades? Biggest programs in the world. Are you moaning that you are too privileged to be affected? Out of touch with reality.

Immediately your lack of perspicacity becomes blatantly evident. Your off-track and weird logic reflects your level of obtuseness. The point is – Aids and TB pose a larger risk than covid and we never had lockdown for those diseases. You are a bit slow out of the blocks, or maybe you are simply ANC. I am willing to help where I can, but I am under no illusion that no amount of explaining can compensate for a lack of capacity.

Pity the comments section has now been infiltrated by the likes of casi_negro and jaapie, who are totally out of their depth here. Come on, Moneyweb, do your “moderation” thing and block their nonsensical utterings which is completely out of place on Moneyweb forums. Don’t make us suffer here as well!

Well, the small matter of going from a 2 day doubling rate to a 12 day doubling rate. Just a little thing.

Did you not think the low death rate is because of the lock down? “The parachute slowed me down therefore you don’t need a parachute.”. SA schooling does not teach deeper thinking.

Sometimes it’s better to say nothing and allow people to assume you are ignorant than to open your mouth and remove all doubt.

It might seem counter intuitive, but it seems you can still eat from a restaurant or stay in someones property even though there’s a virus. Germany, New Zealand, the US all have opened up slowly and things are looking positive. Can do road trips and eat out, without a mask there. If a restaurant is allowed to deliver food, how much riskier would it be to eat on premises?
And a hotel? They just need to make guests happy that want it sanitized… But it should be up to citizens to decide.

“Up to citizens to decide” ?
What sort of crazy idea is that ?
Citizens must do what they’re told.

Aah, does someone want to go on a road trip! Talk about clueless privilege.

Ha ha, all I can say is, wooosh!!

Boy Jaapie, so much anger. So much cynicism. Where did it all go wrong for you? Bullying is a sign of the most fragile of self-belief. I hope things change for you.

Shampies, someone is really struggling with no restaurants and road trips. Even a child can see that NZ and SA are in very different phases of their lockdowns. More clueless privilege.

Are you suggesting that the majority in South Africa are incapable of controlling themselves like the Swedish or Kiwi’s? You may be on to something there.

Did you have something to add to the conversation there?

They should contract the PR agency the tobacco industry are using,

and in no time every pulpit, babble box and soap box their plight will be preach.

and “scientific” papers will show the benefit eating out as against COVID

And the masses keep voting in a regime that starves them and takes away their jobs. At least they get t-shirts near elections!

You lot kept voting in a regime that made you international pariahs and got you to where you are now. What is the difference?

“Mistaking insolence for freedom has always been the hallmark of the slave.”- Wilhelm Reich

“Putting in irrelevant quotes always impresses the illiterate pariahs” – James Trasener.

Beerhouse Fourways has already closed down due to the lockdown … on no wait. They closed down last year because their landlord evicted them due to the non-payment of rent.

Many businesses that were not profitable before are still not profitable now … it’s like a patient dying of comorbidities (having more than one disease) but blaming it on the flu or coronavirus.

Most of South Africa has comorbidities. This means you should take the virus more seriously – not less. Yes, being fat and sedentary counts. Not to mention your air quality.

One of our businesses manufactured products that where bought mainly by overseas tourists. We took the view that it will take at least 18 to 24 month for the tourist industry to come somewhat alive again. Hence :
we were forced to retrench 47 very good people. The factory is closed.
We hope that we can cover the greatly reduced monthly running costs until a re-opening makes any sense. My heart goes out to these good people most of them now depressed , worried about their future and in financial distress.

I’m a hotelier and early in my career, 1999 there about, worked in housekeeping department of Southern Sun. Back then the one of many cleaning standards was to spray sanitizer on the telephone, remotes and all knobs with sanitizer when servicing a guest room. This chemical was expensive and also subject to pilferage by staff ( alcohol in it ) and was later changed to something less costly and with no alcohol as a result.

The worst thing for any reputable hotel now is to open and then get closed a week later due to a covid 19 case.

For hotels hibernation is the best option for now. Remember that many main stream hotel operators don’t actually own the physical properties and costs associated there with but are management agents who work for a percentage of revenue. The owners of the building bear all the costs.

The small to medium owner managed properties will be worst effected eventually ceding market share to the delight of main stream operators.

End of comments.

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