Absence of international visitors “hurting the hospitality industry”, says BER

Posted by Zimasa Katamzi on 7 April 2021

The Bureau for Economic Research (BER) released the business confidence survey results for the Other Services sector which includes hotels, restaurants, transport, real estate and business services in March.

Tourism is only expected to recover in 2022

The survey was conducted during the second half of February when the second wave of the Covid-19 infections was slowing down, and some restrictions were being lifted. This confidence survey covered 370 senior executives and the results showed that the hospitality sector was brutally hit by the second wave.

Beaches were a no-go zone for most of December and January and that put a dent on both local and international travel. The accommodation sector was hit hard because of the prohibition of large gatherings such as weddings.

‘Although [it] activity picked up in comparison to the fourth quarter, it remained way down relative to the same time a year ago when the pandemic had not yet hit South Africa and international tourism.’ the BER noted in its report.

Due to the alcohol ban, restaurants took a lot of strain as dining patrons reduced. As restrictions lifted, however, activity peaked.

‘Passenger transport took a hit and supply chain disturbances dented freight transport’ the report noted. ‘The absence of international tourists, as well as Covid-19 related restrictions (such as the permitted number of people at gatherings) and anxiety, are hurting the hospitality, conferencing, exhibition and passenger transport industry in particular’ the report said.

Sustainable recovery in these industries will likely be seen in 2022 when vaccines have been distributed well, and once international travel has resumed.

During the second wave, the real estate sector was impacted positively. Property sales increased due to the low-interest rates which allowed banks to lend at more affordable rates. However, falling rental income and higher office and retail vacancy put a lot of strain to property management.

‘A large part of the first quarter lift of could probably be attributed to the fact that firms could not further reduce or postpone contracting business services, such as computer, legal, accounting, market research, management consultancy, consulting engineering and debt collection services,’ the report noted.

The Other Services sector is not likely to act as a stimulus for the economy, especially in light of a third wave, load shedding and a ‘dire’ outlook for income in poorer households, the BER said.

PICTURE: Unsplash

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