New Covid scare jolts tourism
Industry dismayed by news of variant and warns government against over-reaction
● A new Covid variant and SA’s return to the UK’s red list sent shock waves through the leisure industry, with shares in hotel groups plummeting on Friday as bookings were cancelled ahead of the critical summer holiday season.
Tshifhiwa Tshivhengwa, CEO of the Tourism Business Council of SA, said news of the new Covid variant B.1.1.529 being discovered in SA and the country being placed on the UK red list had been “a wildfire in terms of cancellations of flights, hotels and everything”.
Business for SA (B4SA) issued an urgent call for vaccine mandates in the workplace and public access restrictions for the unvaccinated.
Martin Kingston, chair of B4SA, said: “We need to rapidly move to a situation where only vaccinated individuals” can travel on public transport or eat in a restaurant.”
B4SA also called on employers to restrict access to vaccinated individuals.
“SA cannot afford more personal or economic pain,” said Kingston.
A statement by the British high commission says the UK has instituted a temporary ban on direct flights to and from SA and five other countries from midday on Friday to 4am today.
British nationals were permitted to travel home this weekend from the region but must quarantine at home for 10 days. Other countries have joined the UK in imposing restrictions on travel to and from SA, among them Germany, France and Israel.
By market close on Friday the shares in major hotel groups City Lodge, Tsogo Sun Hotels and Sun International had fallen 15.09%, 14.2% and 7.45% respectively as news about the red-listing and the new variant reverberated through the industry.
Tsogo Sun CEO Marcel von Aulock said the international tourism market had just started to recover in SA but cancellations of events involving foreign visitors would kill the momentum.
Von Aulock said it was imperative that the government did not “start panicking and putting in place restrictions when they don’t know enough about the variant”, because reimposing local travel bans would destroy domestic tourism.
He said domestic travel “is the only thing keeping us alive. There is no justification for suddenly rushing out and doing travel and alcohol bans.”
Sun International group COO for hospitality Graham Wood said it was essential to avoid creating panic in the domestic tourism market.
“There has been no change to restrictions. We must do what is right, we must act responsibly, keep wearing masks, social distance and encourage as many people as possible to vaccinate and keep the lifeblood of our industry going, and also send out a positive message to local travellers that we are still open for business. It is going to be a great season.”
In a statement, Wood said Sun International hotels such as Sun City and the Wild Coast Sun are “still expecting a great end-ofyear tourist season” and though SA’s return to the UK’s red list is “disheartening”, most of the group’s bookings for the season are from local residents.
Casparus Treurnicht, research analyst at Gryphon Asset Management, said one of the most important aspects of the new Covid scare was that many businesses, particularly small ones in tourism and entertainment, had been preparing for a bumper season.
“In other words, there were preparations and working capital investment which might go to waste.
“This has all been turned upside down and it has the potential to sink many busiBy nesses that were already running low on cash flow.”
Tshivhengwa criticised the way news of the variant was communicated by health authorities and the scientific community, saying it is “not good enough to just announce they have found something”; they should say how they are going to handle it.
“It sows panic. They don’t announce what are the next steps they are going to be taking about testing the efficacy of vaccines against it to make sure we have full information. We have seen this movie before with the Beta variant,” he said, referring to the Covid mutation that sparked SA’s second wave in December last year before being superseded by the Delta variant.
“Haven’t we learnt anything from the past? What is this going to do to the economy? These are bombs. You can’t go and just say ‘this bomb is going off now’. We have to be careful and a communication strategy is key.”
Tshivhengwa said he has great respect for SA’s scientific community, but discoveries should be managed better.
Dr Adrian Puren, the acting director of the National Institute for Communicable Diseases, said the NICD and other scientific institutions have a responsibility to “report what is being observed to the public” as well as to the World Health Organisation “in the interest of transparency”.
But he said scientists also knew that announcements about new variants could have “profound effects” on industries such as tourism, and they try to maintain calm.
Puren said: “We will get a better sense in time of what proportion of new cases this variant makes up.”
Tshivhengwa said Britain’s decision to put SA back on its red list would have a “domino effect”, with many other countries likely to follow suit.
Aviation economist Joachim Vermooten said the news is a “major shock” for the airline industry because direct SA-UK flights had only resumed for a few months.
He said no South African carriers are operating long-haul flights, but the normal inflow of foreign tourists helps the domestic airline market.
● Airline shares tumbled the most on Friday since the early days of the pandemic after European countries banned flights from SA to slow the spread of an emerging virus strain.
The UK said it would halt flights from SA and several neighbouring countries for two days, and require a 10-day hotel quarantine for those who arrive from today.
Germany said on Friday it would only allow airlines to transport German residents back into the country, while European Commission president Ursula von der Leyen proposed an “emergency brake” on air travel from SA.
The Bloomberg EMEA airlines index sank as much as 12%, the biggest decline since March last year. British Airways parent IAG was down 11% in morning trade in London, while Deutsche Lufthansa, Ryanair Holdings and Air France-KLM registered drops of similar magnitude.
The border clampdowns mark a further blow to an airline industry whose recovery has been stalled this month by a fourth wave of coronavirus cases that triggered fresh lockdowns in Europe.
Restrictions in Austria and elsewhere have cast a pall over popular ski getaways while dampening enthusiasm for year-end holiday travel, according to Ryanair CEO Michael O’Leary.
“This is the worst early Christmas present that the airline industry could think of,” said Nick Cunningham, an analyst at Agency Partners in London. “To quote Yogi Berra, this is déjà vu all over again.”
The emerging virus strain first identified in SA has alarmed health officials across the world, suggesting more countries could shut their borders. The EU “emergency brake” allows EU member countries to act quickly to limit risks.
Airlines, one of the industries hardest hit by the pandemic, have been slowly building back capacity since June, with a focus on shorter regional flights as countries started to lift border restrictions.
Long-distance travel also got a boost when the US reopened its borders to European visitors and others this month, but that progress was already starting to wane.
Carriers had started to bring back flights to countries such as SA, a popular sun destination during the northern hemisphere winter. BA was set to restart daily services to Johannesburg by mid-December, while ramping up flights to Cape Town.
“We’re working through plans for our customers and colleagues currently in South Africa and those due to travel from the UK in the coming days,” BA said.
Virgin Atlantic Airways had a London-bound flight from Johannesburg in the air when the news of the red list came through on Thursday night, a spokesperson said.
Officials instructed people coming off the overnight flight to self-isolate.
The real test for airlines will come after generally slow winter months, according to Davy analyst Stephen Furlong. “Airlines, in the main, have excess liquidity,” he said. “Key will be the booking profile in early 2022 for the summer 2022 season, really Easter onwards.”