99% of tourism businesses negatively hit by Covid-19 measures: survey
A survey recently conducted by the tourism sector shows how the industry has been negatively affected by the lockdown.
“The survey found that 99% of respondent businesses have been affected negatively by Covid-19 and the measures taken to limit its spread globally and in South Africa,” a statement released by the Tourism Business Council of SA (TBCSA) said.
The survey, which was completed by 1,610 respondents, looked at the extent of the affect of Covid-19 and was conducted by the tourism department in collaboration with TBCSA and the International Finance Corporation, a member of the World Bank Group.
“The lockdown imposed to contain the spread of the virus curtailed both the supply and demand side of the tourism market and, in essence, the lockdown has rendered the tourism sector totally inactive. The sector’s contribution to the GDP for this year is expected to be very low with severe job losses,” the statement read.
The tourism industry, which employs more than 700,000 people, has, according to the department, seen 43% of businesses having made 50% of their staff redundant.
This, the TBCSA said, indicates that more than 160,000 employees in tourism in South Africa may already have been affected by the global health crisis.
“In February 2020, 79% of businesses in the industry felt neutral or positive about the future of their business and tourism in the country. However, it comes as no surprise that in April, 78% of tourism business had swung to feeling negative about the future.
“This is an unprecedented crisis for the tourism industry, with the affect felt before lockdown and expected to last well beyond the easing of restrictions.
Unless steps can be taken to support the industry, a major component of our economy will close down and restarting it will be a challenge,” said Tshifhiwa Tshivhengwa, TBCSA chief executive.
According to the council, since the introduction of restrictions in the country, 69% of businesses had temporarily closed and 58% have applied significant downscaling.
Tshivhengwa said: “This rises to 82% and 65% respectively for accommodation businesses, a subsector of the industry which has high capital investment levels and a high fixed cost component. No revenue leads to extreme losses if costs are not minimised in this subsector.
“The survey also indicates that 58% and 54% of businesses respectively could not cover debt repayments or fixed costs in March.
“The current inability of businesses to cover costs is likely to lead to more business closures. This, together with the cancellation of planned investments, indicates a huge concern there will be no supply when tourism moves more fully towards recovery, which we hope will be during 2021.”
Blacky Khomani, chairperson of TBCSA, said: “Tourism is an important sector of our economy and we risk being unable to participate in what will be a competitive global industry when the recovery gains momentum.”
According to the council, 35%-69% of businesses have applied for the various relief programmes available.
“Of more concern is that across those who have applied, the perception that the schemes offered value ranged from 1%-8%. This implies he schemes’ benefits are not clear or that the schemes are insufficient to assist given the severity of the financial circumstances faced by these businesses.”