MD Genesis Corporate Solutions
One of the industries that was significantly impacted by Covid was the tourism industry. Harsh lockdown measures and countries placing South Africa on travel red lists meant that the sector was struggling for survival at the height of the pandemic?
Has this improved? We are still recovering from the shock announcement that Comair – and industry stalwart – is now in provisional liquidation which, baring a miracle, will be upgraded to a final liquidation. This will have a significant impact on domestic tourism.
A recent publication by Statistics South Africa pointed out that the tourism sector has been one of the hardest hit by liquidations. Will this increase in the future?
A small trickle
A recent article by Business Insider points out that South Africa is welcoming back visitors, albeit at a third of the rate seen pre-Covid.
The article points out that more overseas travellers have visited South Africa in the first three months of 2022 than at any other point since the Covid-19 pandemic gripped the country more than two years ago.
South Africa’s embattled tourism industry is slowly recovering after more than two gruelling years of Covid-19 and its associated lockdown restrictions. Border closures, flight cancellations, and onerous entry requirements – coinciding with consecutive waves of the pandemic – cut nearly 500,000 jobs from the country’s tourism sector.
The article adds that recent data from Airports Company South Africa and Stats SA show that traveller confidence is on the rise, led by domestic movements.
Overseas travellers, vital to the tourism industry’s survival, are also returning to South Africa, but at nowhere near levels last seen before the Covid-19 pandemic.
The article points out that a total of 267 587 overseas visitors came to South Africa in the first quarter of 2022, most of them from Europe and, more specifically, the United Kingdom, according to Stats SA’s recently published tourism and migration data.
Overseas arrivals have increased by 45% compared to the visitor numbers counted during the final quarter of 2021. Traffic during the busy holiday season would’ve likely been much higher were it not for the discovery of the Omicron variant, which saw swift and stringent travel bans placed specifically on South Africa.
Photo By: TripAdvisor
Deep in the throes
The article points out that, compared to the first quarter of 2021, when South Africa and the world at large were still deep in the throes of the Covid-19 pandemic, overseas visitors have increased by more than 537% a year later.
The focus for the tourism sector, and all industries benefitted by the movement of international travellers, is for arrivals to recover to pre-pandemic levels.
The article adds that most experts believe that international travel will only return to pre-pandemic levels in 2024, at the earliest, according to the United Nations World Tourism Organisation (UNWTO).
This slow rate of recovery is echoed by Stats SA’s comparison of overseas visitors in 2019 and arrivals in 2022.
The article points out that, compared to pre-pandemic traveller volumes, overseas arrivals in South Africa are still only at 37% of levels recorded in the first quarter of 2019, when the country welcomed more than 700 000 tourists.
Severe job losses
Another Business Insider article points out that South Africa’s tourism sector shed close to 500 000 jobs during the first year of the Covid-19 pandemic, with stubborn travel restrictions in 2021 piling further pain onto the embattled industry.
Covid-19 crippled the global travel industry. Border closures, flight suspensions, and onerous entry requirements led to a tourism meltdown, with far-reaching consequences for the broader hospitality sector.
The article adds that almost 1.5 million direct and indirect jobs were supported by South Africa’s travel industry prior to the pandemic. This level of employment dropped to less than 990,000 in 2020, representing a reduction of 32.4%, with little reprieve in 2021, as revealed by Tourism Minister Lindiwe Sisulu during a budget vote speech in May.
Direct jobs supported by the industry include hotels, travel agents, airlines, and other passenger transportation services, while indirect employment extends further to employment within hospitality, restaurants, and leisure industries.
“Like a bolt of fire from nowhere, our bustling tourism was brought to a sudden halt with the advent of Covid-19. The impact of the Covid-19 pandemic was immediate and devastating,” said Sisulu during her address before parliament.
The article points out that, although travel to and within South Africa has shown signs of recovery in the first quarter of 2022, tourism activity is still a long way off pre-pandemic levels.
The industry’s recovery has been further hampered by the July unrest and recent devastating floods in KwaZulu-Natal, as noted by parliament’s portfolio committee on tourism. These factors have resulted in a “negative brand image” for South Africa, further dissuading potential travellers and slowing the recovery process.
And there’s no telling when – or even if – international travel will return to levels seen before the pandemic.
“Global tourism is rebounding despite lingering Covid restrictions and the effects of the conflict in Ukraine, but tourist arrival numbers are not back to pre-pandemic levels. The pace of recovery is slow and uneven across world regions, and this is due to varying degrees of mobility restrictions, vaccination rates, and traveller confidence,” said Sisulu.
Photo By: TripAdvisor
Significant support needed
In 2020, the tourism sector contributed 3,7% to South Africa’s GDP. While this number may seem insignificant, any growth during a period of economic uncertainty will be a major boost to the country.
This then means that the liquidation of Comair is all the more worrisome for the industry.
How are we supporting the tourism sector? What measures are turnaround professionals putting in place to help companies within the sector address the challenges that are the root cause of their financial distress? We cannot stand back and let the tourism sector become a hotbed of liquidations, to many lives are at stake.
Phahlani Mkhombo is the MD of Genesis Corporate Solutions and is a Senior Business Rescue Practitioner
