Bringing tourism back to life after the pandemic
Countries have put measures in place to contain the spread of the virus. These include closing borders or imposing travel restrictions, and in some cases imposing a national lockdown. The supply and the demand sides of the tourism sector have temporarily collapsed and, as a result, tourism has ground to a halt.
Before the Covid-19 pandemic, the South African economy was in a precarious position. The economy had not been growing at desirable levels for some time and as a result the debt to gross domestic product (GDP) was growing, our Budget deficit was widening, and the SA Revenue Service was not collecting enough revenue to cover the needs of the population.
This means that the pandemic found our economy in a very vulnerable state.
Over the past 10 years, the tourism sector has been growing faster than any other sector in South Africa, and was among the best-performing sectors in our economy.
The number of international arrivals grew from 8.1 million in 2011 to 10.2 million last year. 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 last year, indications were that this year was poised for an increase. According to Statistics SA, we recorded an increase in the number of arrivals in February compared with the same month last year.
Change for the worse
However, the situation has drastically changed for the worse for the sector since 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 are 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 65000 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 80 to 90percent
The Southern African Association for the Conference Industry, the nation’s largest organisation representing the interests of the business events trade and professionals, indicated that the global lockdown has resulted in the cancellation of all conferences and other events.
Initial estimates are that R746.8million in business has been lost due to the cancellations, with potentially 6039 jobs losses already.
The government has put together relief programmes to assist businesses through this tough time.
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 fund will provide a once-off grant to small, medium and micro enterprises in the tourism value chain to ensure their sustainability during and after the implementation of the government’s measures to curb the spread of Covid-19.
Capped at R50000 per entity, the grant is aimed at assisting entities to cover fixed costs, operational costs, supplies and other costs.
Entities in the following categories of the tourism value chain are the eligible to apply:
* Accommodation establishments: hotels, lodges, bed and breakfast establishments, guest houses and backpacker lodges.
* Hospitality and related services: restaurants (not attached to hotels), conference venues (not attached to hotels) and professional caterers.
* 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 organisations such AfriForum and Solidarity proudly celebrate freedom and democracy when they think that the majority of South Africans are not good enough to participate meaningfully in the economy of their own country, and particularly in a sector such as tourism?
In his address last week, 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.
Similar to 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 have 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 on, 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 fewer 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 return 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 their 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.
Questions about the future
In the meantime, entrepreneurs in the sector have to grapple with some questions, which include:
* What will tour guiding look like in the time of social distancing?
* Will group tours still be viable in the time of social distancing, and if they are, in what form?
* 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 take to instil confidence in travellers that their accommodation facilities are safe?
* Should restaurants that don’t do takeaways and delivery start revising their business models, as the world might be witnessing the rise of the shut-in economy.
* If the pandemic persists, 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 chief executive of South African Tourism (SAT) 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 input on the post-Covid-19 tourism sector. So far, three webinars have been convened, and I will be leading another webinar tomorrow.
The recovery plan will present scenarios and a range of strategies that will be used to place the tourism sector back on a growth trajectory after Covid-19. I invite you all to make yourself available for these engagements, because they will help us to define the sector going forward.