Industry insider reveals the true impact of the lockdown on the South African travel industry

The extended lockdown has had a devastating impact on many sectors, and one of the hardest hit is the South African travel and tourism industry.

The lockdown regulations prohibit hotels, lodges, bed and breakfasts, and private homes from offering paid leisure accommodation.

The situation is further aggravated by the restrictions on air travel, moving between provinces, and consuming food and alcohol in restaurants.

South Africa’s tourism industry, which provides jobs for more than 740,000 people, is facing a catastrophe as a result of these restrictions.

Tshifhiwa Tshivhengwa, the CEO of the Tourism Business Council of South Africa, has warned there will be nothing left if the industry remains shut this year.

A survey by Cape Town Tourism echoed Tshivhengwa’s views, with 59% of travel and tourism businesses saying they expect revenues to fall to zero between April and June.

83% of these businesses also said they would not survive longer than six months under the current lockdown conditions.

A further challenge for the industry is that there is no clear path to recovery. 56% of tourism businesses indicated they do not have a recovery plan in place.

An insider’s view

To get an industry insider’s view on the true impact of the lockdown on the South African travel and tourism industry, MyBroadband spoke to Afristay CEO Rupert Bryant.

As one of South Africa’s premier accommodation booking platforms, Afristay has unique insight into the local tourism industry.

Rupert told MyBroadband the COVID-19 outbreak and the subsequent lockdown has had a devastating impact on their business and the industry.

“Prior to the lockdown – in early March – we were poised to have one of our best months,” said Bryant.

Since the lockdown was implemented, Afristay’s web traffic dropped 96% almost overnight and sales have been virtually zero.

To make matters worse, Afristay had to refund all bookings which were made prior to the lockdown. This means their sales for April and May were negative.

“The lockdown has put us in an utterly non-operational state. We have had to put a large majority of our staff on unpaid leave,” said Bryant.

Without clear guidance on when the lockdown will end, it is risky for businesses like Afristay to reopen and accept bookings – as this can result in further refunds with associated banking and admin costs.

Bryant said their customer-centric policy to refund all guests who request it has taken a “tremendous toll” on their finances.

The charts below show the impact of the lockdown on Afristay’s web traffic (first chart) and daily sales (second chart).

Web traffic

Sales

Challenge for tourism businesses to get funding

Another challenge for South African travel and tourism businesses is to get funding during the lockdown.

International competitors like Airbnb and Booking.com have raised large amounts of money over the past few months, which will help them to weather the storm.

Local businesses, in comparison, do not have equal access to low-interest lending or funding to see them through this time.

Apart from the risk of closing down, it also puts local businesses like Afristay at a disadvantage against international competitors when the market opens again.

Although the government has created a Tourism Relief Fund to assist SMMEs in distress, the assistance is capped at R50,000 and it is not easy to get this assistance.

The funding is guided by Broad Based Black Economic Empowerment (B-BBEE) codes, which makes it more difficult for certain businesses to qualify for funding.

There have also been complaints that applications have been rejected for not submitting the right documents even though applicants did exactly what was required.

There have been industry calls for the government to do more to assist local travel and tourism businesses and ensure they can compete on an equal footing against their global counterparts.

Consumers are also encouraged to support the local travel and tourism industry when the lockdown restrictions are lifted.

This is needed to minimize job losses, strengthen tax collections, and support the South African economy.