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Travel bans, Covid-19 fourth wave more than halve hospitality confidence, survey shows

21st Feb 2022 | Hospitality

-A report by the Bureau for Economic Research at Stellenbosch University found confidence in SA's hospitality sector fell sharply after many countries imposed strict travel bans when the Omicron variant was identified.
-The drop came when confidence in the SA hospitality industry was actually improving in the third quarter of the year and in anticipation of a good summer tourism season.
-Those hopes and dreams seem to be fading with domestic tourism remaining the only high season hope for the hospitality sector.

Confidence in South Africa's hospitality sector more than halved after strict travel bans were once again imposed by many countries in response to local scientists alerting the world of their identification of the Omicron variant.

According to a snap poll by the Bureau for Economic Research (BER) at Stellenbosch University, the confidence level dropped from 58 in a poll done in November, to 25 by the end of the first week of December. For the purposes of the index, 50 is the neutral point.

"Instead of a better high season than last year to bring South Africa's hospitality industry a reprieve, the international travel bans and the onset of the fourth Covid-19 wave locally have dealt the tourism industry a heavy blow. With this happening just before the start of the peak summer holiday season and the fact that the UK and Europe are major source markets for foreign tourists to South Africa, the travel bans could not have come at a worse time," states a BER report released on Monday. 

"The bans mean that it will once again be up to domestic tourism to provide some demand. This will have an immense adverse social impact amidst record-high unemployment levels."

Before the identification of the new variant and subsequent travel bans, local hotels and restaurants ramped up their hiring of additional staff in the run-up to an expected bumper summer season. Hotels also lifted their prices from previously deeply discounted levels.

The report further found that the unrest in KwaZulu-Natal and Gauteng in July heavily impacted transport services in the third quarter this year. Activity in land freight transport, however, bounced back in the fourth quarter, but the BER expects the comeback in passenger transport is likely to be modest after the international travel bans. 

"The unrest also knocked the real estate sector in the third quarter. Activity made a comeback in the fourth quarter. However, the pace of improvement paled in comparison to the second quarter," states the report.

The report found that confidence in what it terms "the other services sector" (hotels, restaurants, transport, real estate and business services to distinguish them from the retail, wholesale and motor trade sectors) jumped from 37 in the third quarter to 49 in the fourth quarter of 2021. The 12-point increase is the largest ever recorded in the survey’s 16-year history. 

"This brought confidence to within a hair's breadth of the neutral 50-mark, which is the point where equal percentages of executives are satisfied and unsatisfied with prevailing business conditions," states the report.

"Unfortunately, this positive development comes with a big qualifier. The fieldwork of the survey was conducted before South African scientists went public with the identification of a new Covid-19 variant, later named Omicron, on 25 November. Starting with the UK, this led to a large number of countries banning travel to South Africa."

By: Carin Smith