Tourism is recovering in South Africa; however, there is a severe threat of derailment ahead

The Covid-19 Pandemic had a significant impact on the South African tourism industry. Countries worldwide imposed a travel ban on South Africa, while others issued a travel advisory against the country. Locally, South Africans were barred from travelling around the country as the Government issued stringent lockdown laws that prevented the movement between provinces.

This meant that businesses in provinces that rely on tourism as a significant source of income were severely impacted. Many accommodation businesses – such as the Fairmont Zimbali Hotel in Ballito – turned to business rescue to address their financial distress. Other hotels, such as the iconic Royal Edward Hotel – were not so lucky and were placed into liquidation.

Many industry experts asked if the hotel and accommodation sector would ever recover from what was described as draconian lockdown measures. However, the rise of Revenge Tourism has sparked renewed interest in South African travel, with liquidations in what was a vulnerable sector declining significantly.

Signs of recovery

According to a report by Statistics South Africa (StatsSA), released on 25 July, there are visible signs of significant recovery in the tourism sector.

According to the report, the total revenue generated by hotels between March and May 2022 was just over R2.4 billion. This revenue increased to more than R 3.3 billion over the same period in 2023. There was a similar recovery among guest houses and guest farms. The StatsSA report shows that the total revenue generated by guest houses and guest farms between March and May 2022 was just over R266 million. This revenue increased to more than R 325 million over the same period in 2023.

This revenue should increase significantly as we head into December, the peak tourism season in South Africa. The StatsSA release points out that the units available at hotels should remain stable at 72 200 units (meaning that no new hotel rooms will become available) but that the revenue generated in December 2022 was just over R1.3 billion, with the country’s hotel occupancy rate pushing 65%.

Additionally, the StatsSA release points out that the units available at guest houses and guest farms should also remain stable at 14 800 units. The revenue generated in December 2022 was just over R124 million, with an occupancy rate pushing 23%.

Despite a recovery, liquidations remain high

Even though there are visible signs of recovery, liquidations remain high.

According to a report by StatsSA, There were 153 liquidations in the trade, catering and accommodation sectors between January and June 2023. Of these, 141 were voluntary liquidations, while only 12 were compulsory.

A province hamstrung by problems

KwaZulu-Natal, a traditional tourism hotspot within South Africa, is struggling to address the fallout of several disasters which have hit the province.

The province was hit by heavy rainfalls in April 2022, which caused significant damage to infrastructure. During this time, 16% of bookings were cancelled, which translated to a loss in projected visitors of 20%, about 30 000 visitors. This is significant, considering that the occupancy rate of KZN hotels over the Easter period in 2022 was just over 54%; this is traditionally closer to 70% and 75%.

Many sewage pumps, which were already poorly maintained, suffered critical breakdowns during the April 2022 floods. Since then, raw sewage has been pumped into eThekwini’s rivers and oceans, leading to high levels of E.coli in the city’s waters. At the end of June 2023, the eThekwini  Municipality was forced to close seven key beaches in the province because of the sewage issue.

With no signs of the situation being contained, the December tourism season is severely threatened.

Turnaround partnerships

If Government has said that the private sector would be playing an increased role in the country’s economic development in the future, surely there should be more partnerships between this sector and Government to address critical issues.

The city of eThekwini recently announced that it would be embarking on an ambitious turnaround programme to address the issues it faces. Surely the city can benefit from the skills and expertise of private companies that are significantly invested in a prosperous tourism season. There is a lot more at stake than pride and the ability to address a significant challenge with the limited resources that you have available.

We are seeing a revival in tourism. Will this be derailed?