South Africa pins hopes on cash-strapped local tourists

Cape Town, South Africa | Mon, August 31, 2020 | 11:13 pm

Lisa Krohn’s Ashanti Lodge in Cape Town is now completely vacant, an indication of how the pandemic has destroyed the tourism industry in South Africa.

“This place is like a morgue,” she said, considering the empty foyer of the Victorian-era house.

South Africa is relaxing domestic travel restrictions after a five-month freeze, enabling hotels to reopen. With international boundaries still locked, the government is pinning its hopes on domestic tourism, following a mixed-outcome policy being tried from Vietnam to New Zealand.

South Africa remains among the countries hardest hit by the pandemic however. And with recession-battered consumers watching their pocketbooks, many in the sector foresee an uphill battle.

“When your tourism industry is all geared towards international tourism, domestic tourism will not compensate,” said Olivier Ponti, vice-president at ForwardKeys, which studies global travel trends. “It’s just impossible.”

Abundant wildlife, stunning scenery and renowned vineyards have made South Africa one of the world’s big long-haul travel destinations, establishing tourism as a pillar of the economy.

Last year, it welcomed over 10 million international visitors. SA Tourism, the sector’s marketing agency, was targeting 8.7 percent year-on-year growth in inbound arrivals in 2020 with total tourist spending projected to reach 273 billion rand ($16 billion).

But COVID-19 placed a screeching halt to the sector as governments closed borders and enforced lockdowns.

“It’s not just a drop in sales, it’s been zero profits,” said Tintswalo CEO Lisa Goosen, who runs high-end lodges and luxury hotels.

Of the tourism companies that replied to a government survey, 64 per cent were unable to service their debts in May and 67 per cent were unable to meet fixed costs. Several firms laid off workers or cut salaries. Others went bust.

SA Tourism says nearly 440,000 tourism jobs are at risk this year. The sector is expected to lose 75 percent of projected revenues and 80 billion rand in foreign receipts.

A lost season?

With South Africans now for the first time since March allowed to fly between provinces, tourist-focused businesses are pivoting to domestic customers to remain afloat.

Krohn’s Ashanti Lodge had started renting long-term rooms to locals who needed affordable accommodation to keep the lights on. Now hotels and guesthouses like hers race to bring together deals for “city vacations.”

At properties including its five-star hotels in Cape Town and luxury safari lodges previously frequented by Americans and Europeans, Tintswalo has lowered prices by 50 per cent for “staycation” offers.

Restaurants on the city’s waterfront are recalling furloughed staff. Game reserves are preparing campsites.

Authorities says travel by South Africans will be key to relaunching the sector, starting with outings close to home then broader domestic tourism.

“High domestic demand in the second half of 2020 will be critical to success,” SA Tourism wrote in a recovery plan recently released.

ForwardKeys analysts saw a 60 per cent rise in domestic flight searches as the government loosened travel restrictions in an early sign of pent-up demand.

But those volumes are still 80 per cent down from last year’s same time, and current economic woes are likely to dampen any domestic travel recovery.

South Africa was still in decline when the pandemic hit. This year, the economy is forecast to contract by 7.2 %  and lockdown cuts have added 30 per cent to a pre-COVID unemployment rate.

“We are going to have a lot more unemployed people, which means there is going to be a lot less disposable income,” said Enver Duminy, CEO of Cape Town Tourism.

Local tourism was already slipping. Domestic trips dropped nearly 14 percent year-on-year in 2018. And domestic tourists spend much less than foreign visitors.

“Domestic travelers only are not sustainable to tourism,” said Tshifhiwa Tshivhengwa, CEO of Tourism Business Council South Africa. “We need international markets.”

Anyone’s guess when foreign tourists return. Now is when they’d usually book for high season from November to March. However, it’s uncertain when the borders of South Africa will reopen, and when they do, few foresee a major turnaround in long-haul leisure travel.

As waves crashed onto the rocks below Chapman’s Peak road, Goosen said she was pleased to finally reopen Tintswalo’s hotel to guests from wherever they came.

“I think the season is lost but we’re trying to keep our workers working at least.”

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