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%.
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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.
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.
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.
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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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