OPINION: Post Covid-19 recovery plan as travel, tourism have changed forever
PRETORIA – The breakout of the Corona virus in the beginning of this year, which came as a shock to all of us, has plunged our country and the whole world into the worst recession since the 1929 great depression. Every sector of the economy has been negatively affected and travel and tourism sector, in particular, has been the worst hit.
In responding to the rapid spread of the virus, countries around the world put measures to ensure that they contain the spread.
These measures include closing the borders or travel restrictions and in some cases, similar to our country, countries have imposed a lockdown. This means that the supply and the demand side of the tourism have temporarily collapsed and as a result tourism has ground to a halt.
Before the breakout of the Covid-19 pandemic, the South African economy was already in a precarious position. Our economy had not been growing at desirable levels for some time and as a result our debt to gross domestic product (GDP) was growing, our budget deficit was widening and SA Revenue Service was not collecting enough revenue to cover the needs of our population. This means that the pandemic found our economy in a very vulnerable state.
Meanwhile, in the past 10 years, the tourism sector has been growing faster than any other sector in South Africa and was amongst the best performing sectors in our economy.
The number of international arrivals grew from 8.1 million in 2011 to 10.2 million in 2019. Tourism directly contributed R130.2 billion (2.7 percent) to GDP in 2018 and an estimated R145.3bn (2.9 percent) of total GDP last year.
A total of 739 657 individuals were directly employed in the tourism sector in 2018, which means that 4.5 percent of the total workforce worked in the tourism sector.
Although we experienced a decline in the number of international arrivals between 2018 and 2019, indications are that the year 2020 was poised for an increase. According to Statistics SA, we recorded an increase in the number of arrivals in February 2020, compared to the same month in 2019.
However, the situation has drastically changed for the worst for the sector since the breakout of the Covid-19 pandemic. We are no longer receiving any international arrivals and it is uncertain when people around the world will start travelling again.
Restaurants have been closed and many are facing permanent closure. The Southern African Vehicle Rental and Leasing Association, which represents vehicle rental and leasing companies that operate about 65 000 vehicles across the country reported that the sub-sector has seen a drastic contraction in demand due to both inbound tourism and all local travel and tourism activity declining. Contraction in the rental business thus far is estimated to be up to 80 percent – 90 percent.
The Southern African Association for the Conference Industry, as the nation’s largest organisation representing the interests of the business events trade and professionals, indicated that the global lockdown has resulted in cancellation of conferences and other events.
Initial estimates are that R746.8 million in business is lost due to cancellations, with potentially 6 039 jobs losses already.
Our government has put together relief programmes to assist businesses through these tough times. They may not be enough but they will go a long way to ensure that the sector survives this crisis.
For our part as the Department of Tourism we have put together the Tourism Relief Fund. The Tourism Relief Fund, which is a once-off grant assistance to small, micro- and medium-sized enterprises (SMMEs) in the tourism value chain to ensure their sustainability during and post the implementation of government measures to curb the spread of Covid-19. Capped at R 50 000 per entity, the grant is aimed at assisting entities to cover fixed costs, operational costs, supplies and other pressure costs items.
Entities in the following categories of the tourism value chain are the eligible to apply:
- Accommodation establishments: hotels, lodges, bed and breakfast (B&B’s), guest houses and backpackers.
- Hospitality and related services: restaurants (not attached to hotels); conference venues (not attached to hotels), professional catering; attractions
- travel and related services: tour operators; travel agents; tourist guiding; car rental companies; and coach operators.
The irony of it all is that – a day after Freedom Day – we are in Court defending the Broad-Based Black Economic Empowerment requirement in our criteria against Afriforum and Solidarity.
It is an irony because it is a day after we celebrate the sacrifices made by patriots to provide future generations with the opportunity to heal the divisions of the past and achieve social justice. How do organizations such Afriforum and Solidarity proudly celebrate freedom and democracy when they think that majority of South Africans are not good enough to participate meaningfully in the economy of their own country and especially in a sector such as tourism?
In his address on the 24th, President Cyril Ramaphosa announced the adoption of a risk-adjusted strategy in opening up our economy. As the risk of the virus spread gradually reduces, the country will also gradually move towards level 1. The tourism sector will begin to experience significant operations at level 2 of the risk-adjusted strategy.
Similar to all other sectors of the economy, the tourism sector is also experiencing technological transformation, and this crisis helped to accelerate this transformation. Meetings, incentives, conventions and exhibitions commonly referred to as MICE has experienced technological disruption and this might mean a partial collapse of the supply side of this market.
Because of the lockdown and travel restrictions globally and domestically, companies, organisations and individuals have adopted online video and audio conferencing technologies such as Zoom and Microsoft Meetings to conduct their meetings. From now hence, we are likely to see the rise of virtual meetings, conferences, exhibitions and conventions. This will have an immediate negative impact on the supply side of travel, accommodation, food and other activities because less people will be travelling.
Before this crisis we had launched a campaign called "Stay a night”. This campaign was aimed at business travellers who come to our shores to encourage them to stay an extra night or more before they go back home. As meetings and business events become more and more virtual our campaign will become irrelevant.
All of us have to appreciate that travel and tourism will never be the same, it has changed and it is changing. However, the beautiful places will still be there when the Covid-19 pandemic passes and people will still need places to visit and enjoy rest after they labour. We are, therefore, confident that tourism will recover, but the provision of certain tourism services will be altered forever. Some changes might be temporary until the world discovers a vaccine.
In the meantime, entrepreneurs in the sector have to grapple with some questions which include:
- How will tour guiding look like in the time of social distancing?
- Will group tours still be viable in the time of social distancing, if they are, in what form will they be?
- What form will events, big and small, take in the time of social distancing?
- What kind of procedures and actions will business owners need to perform to instil confidence in travellers that their accommodation facilities are safe?
- Should restaurants that don’t do take-aways and delivery start revising their business models as the world might be witnessing the rise of the shut-in economy (indoor economy that is largely found in silicon valley).
If the pandemic persists for longer, is it possible that we could start seeing people adopting virtual reality as a way of visiting places?
We are confident that tourism will return to full operation and the South African Tourism (SAT) chief executive has been tasked with driving the process of developing the tourism recovery plan for South Africa. As part of the process SAT has been convening weekly webinars with various tourism stakeholders to get their inputs on the post-Covid-19 tourism sector.
So far three webinars have been convened and I will be leading another webinar this Wednesday. The recovery plan will present scenarios and a range of strategies that will be used to place the tourism sector back on the growth trajectory Post-Covid-19. I invite all you to make yourself available for this engagements because they will help us define the sector going forward
Mmamoloko Kubayi-Ngubane is SA Minister of Tourism, a Member of Parliament.