THE BUREAU for Economic Research (BER) has warned of a prolonged recovery in industries including real estate, transport and hospitality due to continued subdued activity even after the easing of lockdown restrictions.
The BER yesterday said harsher lockdown and unrest had hit transport, real estate and hospitality industries in the three months to September, in spite of confidence in the other services sector rising for the fifth consecutive quarter.
Data from the BER showed that confidence in the other services sector rose from 34 index points in the second quarter to 37 index points in the third quarter of 2021. The “other services sector” is made up of the hotels, restaurants, transport, real estate and business services, to distinguish them from the retail, wholesale and motor trade sectors.
BER’s deputy director, George Kershoff, said although the increase was encouraging, the current reading nevertheless indicated that only slightly more than one third of respondents were satisfied with business conditions in the third quarter.
Kershoff said the overall results hid a divergence among the sub-sectors as confidence and volumes deteriorated in all the sub-sectors except for business services. He said although the continued improvement in business volumes in the crucial business services sector was encouraging, it could not make up for the declines in all the other sectors.
“In addition to the third Covid-19 wave and looting in July, the continued lack of international tourists and business travellers kept on stifling the accommodation sector,” Kershoff said. “The resumption of limited indoor dining in August supported restaurants, but household income pressures and reduced patronage kept a lid on improvement.”
In the transport sector, Kershoff said road freight transport activity was curtailed by the temporary closure of the N3 highway in July due to the looting, the cyber attack on Transnet, and delays in international shipping. He said passenger land transport, travel agencies and tour operators continued to take strain owing to the third Covid-19 wave and the absence of international tourists.
Recent tourist accommodation statistics have shown a gradual recovery since February, but the move to stricter lockdown restrictions had a severe impact on the hospitality industry. Statistics South Africa recently revealed that seasonally adjusted income for tourist accommodation plunged by 52.8 percent month-on-month in July. Hotels and guest houses/ farms were hardest hit, with income declining by 60.3 percent and 60.6 percent, respectively.
When compared to the same month in 2019, total income for the industry was down by 74.2 percent. In addition, occupancy rates stood at only 16 percent in July. To put this into perspective, in 2019, the average occupancy rate for the full year was 46.6 percent.
Kershoff said the absence of international tourists, Covid-related restrictions and consumer anxiety continued to hurt the hospitality, conferencing, exhibition and passenger transport industry in particular. “A stronger, sustainable recovery in these industries is only likely to start in 2022 once vaccinations have been rolled out more widely and international travel resumes,” Kershoff said. “Property management and business services are likely to trail the recovery of the rest of the economy.”