Long road ahead for tourism-sector recovery
Like many other tourist attractions, the 94-year-old River Meadow Manor in Centurion temporarily shut its doors five months ago when the country entered lockdown. In an average month, the 5 140 hectare farm received about 3 000 visitors, but lockdown brought that number down to zero.
The venue opened for business travellers on June 1 when lockdown restrictions were relaxed to allow business travel, but owner Siyanda Dlamini says, “The increase in infections, children still not back at school, [and] most people working from home at reduced salaries, [mean] travel, both for business [and leisure], has become the least priority for individuals and for corporates.”
River Meadow is one of the 3284 applications of about 7000 that did not make the cut to receive assistance from the Tourism Relief Fund. The R200-million fund reached 4 000 businesses in the tourism sector that have been affected by the pandemic.
Successful applicants received a once-off payment of R50000 each. The fund is now depleted.
Travel restrictions brought on by the pandemic had already wiped out R54.2-billion of the industry’s domestic value. The tourism department estimates that if restrictions were not relaxed in June to allow for partial air and business travel, the sector would have lost R149.7-billion, with as many as 438 000 jobs likely to be cut.
Many companies in the sector have downsized operations and laid off thousands of workers. The question becomes how much further the sector will fall and what course of action should be taken to ensure its recovery.
Tourism Business Council of South Africa chief executive Tshifhiwa Tshivhengwa says the unbanning of alcohol sales and relaxation of the curfew would go a long way in helping the industry to recover.
Last week, Tourism Minister Mmamoloko Kubayi-ngubane announced that the curfew had shortened by an hour, with its starting time moved from 9pm to 10pm, to allow restaurants to increase their revenue generation. The booze ban, however, remains in place, despite concerns raised by the industry about the negative effect the ban has on the revenue.
Alcohol sales can account for up to 80% of sales for restaurants, Tshivhengwa says, and for the restaurant and tourism industry to survive, “They must be made to trade normally and they should be able to sell alcohol.”
Tshivhengwa says while the country grapples with the pandemic, alcohol sales should be permitted under various strict conditions including only permitting trade during specific hours and offsite consumption. This should be accompanied by a broader campaign around the responsible consumption of alcohol, he says.
Domestic tourism for leisure and business travel is permitted under level three of the government’s riskadjusted strategy. Business travellers are allowed to travel to other provinces, but leisure tourists are restricted to the province in which they reside. Tshivhengwa says this strategy should be changed, because
Focus will be on interventions to protect the domestic supply side of the tourism sector domestic tourism relies on interprovincial travel for income generation.
The Free State, Mpumalanga, North West and Limpopo tourism sector relies on travellers from Gauteng for revenue, Tshivhengwa says. Despite signs of life, he does not expect these provinces to recover from their losses within this year.
“The little demand that is there will help but we don’t even think that we are going to break even this year... We know that there [won’t] be large-scale demand, but they [travellers] should be able to cross provinces,” he says.
Although the Tourism Relief Fund has been depleted before it could assist all applicants, the department of tourism told the Mail & Guardian that it would not be approaching the treasury for additional funds. Instead, the department would source outside funding.
The emphasis will be on managing the reopening of the sector as tourism activity increases
In a draft recovery plan published this week, the tourism department says an initial R15.4-billion would need to be pumped into the sector ahead of reopening. This would form part of the Enhanced Tourism Support Package that would inject liquidity and would cover “up to two months’ working capital relief needed to cover the absolute minimum fixed overheads of all distressed businesses”.
The country’s weakened fiscal state makes going to the treasury to fund the tourism package unfeasible. The document proposes investment from private capital be sourced over the medium term. It also suggests that international development finance institutions be approached, because they “could have appetite to participate and could commit first-loss capital and or quasi-equity lines (where capital is repaid from future commercial returns), to further strengthen the viability of the package.”
The draft recovery plan proposed reopening the sector in three phases.
Phase one (zero to three months) will primarily focus on interventions to protect the domestic supply side of the sector. Phase two of the draft plan (three to 24 months) will focus on reopening and growth. Phase three of the plan (24 months) will focus on ensuring that strategies are in place to ensure sustainability and growth
If implemented successfully, these phases could help the sector recover to its 2019 levels. Job losses are inevitable, but the document says the interventions will save about 125 000 jobs in the sector.
Thando Maeko is an Adamela Trust business reporter at the M&G