SA's beleaguered hotel industry is pinning its hopes of a resuscitation on a successful vaccination rollout before year-end.
The CEOs from some of the country's top hotel groups said this week if vaccinations could be ramped up to 300,000 a day or even higher, it would mitigate a potential fourth wave of the pandemic and significantly reduce deaths.
This would encourage a substantial recovery in leisure travel, both international and local, as people start to feel safer, and ultimately have a knock-on effect on a subdued corporate travel market, which is expected to be the last segment to fully recover.
The stop-start nature of SA's lockdown, which began at the end of March last year, has until now resulted in periods of partial recovery followed by complete standstills for hotels as harsher restrictions coincide with the waves of the pandemic.
Wembley Stadium
— Marcel von Aulock
had 60,000 people
because they had
vaccinated everyone
CEO of Tsogo Sun Hotels
Marcel von Aulock, CEO of Tsogo Sun Hotels, says the third pandemic wave and the accompanying level 4 restrictions, which include a ban on alcohol sales and leisure travel to and from Gauteng, have "decimated" the leisure travel market after some encouraging months of recovery since the end of the second wave of infections earlier this year.
He says a successful vaccination rollout is "the light at the end of the tunnel" the hotel sector is pinning its hopes on.
"Wembley Stadium had 60,000 people in it on Sunday night [for the England-Italy
Uefa Euro football final) because they had vaccinated everyone.
"If you can get that done, that is the light at the end of the tunnel, and the UK proves it. There was a full Wembley and Wimbledon tennis tournament."
In contrast, he says, SA has the British and Irish Lions rugby team on tour in SA but with no spectators and hardly any activity in hotels.
"Normally we would have thousands of spectators milling around hotels trying to get autographs and you'd have thousands of Barmy Army [English] supporters in the country as well as all the local fans going to the games. The hotels would be a hive of activity."
Anthony Leeming, CEO of Sun International, which owns resorts such as Sun City and the Wild Coast Sun, agrees with Von Aulock, saying the "vaccine rollout is critical" for the full recovery of the hotel sector.
"You can see what happens around the world when restrictions are lifted. It really has a massive impact on people's livelihoods and the way people live their lives. My gut feeling is that this is key to us opening up and getting back to where we were before the pandemic," says Leeming.
He says even though the UK is experiencing a fourth wave of infections, its successful vaccination programme has resulted in its death rate falling dramatically.
"Once you've vaccinated the population, while Covid can still spread, it is not the deadly disease it was without the vaccinations."
2
The number of Sun International’s 13 hotels in SA that remain open
Andrew Widegger, CEO of City Lodge Hotels, says a successful vaccination rollout is crucial to either stop or significantly slow down the waves of the pandemic and reduce deaths. It will also help bring back much-needed international travel to SA, he says.
Widegger says that before the present third wave, the hotel sector had expected to get back to pre-Covid-19 occupancy levels by the middle of next year and that this "was still on the cards" if the vaccination programme gains significant momentum.
Violent protests and looting sparked by supporters of former president Jacob Zuma wanting him released from prison disrupted the vaccination programme this week, just as progress was being made with the ramping up of vaccinations.
But Widegger says if the rollout can gather steam again, it will go a long way to helping the hotel sector recover.
He also says SA's main international tourism feeder markets include the US and Europe, where large portions of the population have already been vaccinated, so this could encourage travel here once restrictions are lifted. A successful local vaccination programme will reinforce this, says Widegger.
Leeming believes that even with a successful vaccination rollout, the business travel segment faces a tougher recovery than leisure. But he says this segment, particularly conferencing, still has a lot of growth potential even if its recovery will lag the local and international leisure travel business.
"I do feel the tourism market will recover reasonably quickly because there is a lot of pent-up demand, but corporate conferencing may take a little longer.
"Business travel in general is going to take a bit longer to recover. People have learnt to work differently so there is less need to travel and businesses are also cutting back on costs."
But Leeming believes there is still potential for growth in business travel further down the line.
"Companies are going to, in time, try and get their people away to have a bit of fun and to interact again at conferences. So I do see a pick-up in the corporate market."
Based on what has happened previously between the first, second and third waves of the pandemics, Von Aulock believes the leisure sector should show a "relatively good and quick recovery" once the number of Covid-19 infections start to come down and restrictions are lifted, which he hopes will be at the end of the month.
The third wave has been worse for the hotel sector than the first or second waves, he says.
"We had picked up quite nicely in March, April and May and then we started seeing an impact in June, when the third wave was climbing, but it wasn't too bad. When the restrictions kicked in, that really just decimated travel."
He says people had already been reducing travel before the level 4 restrictions were announced out of fear about spiralling Covid-19 infections. This has now been compounded by the fact that people are not allowed to travel to and from Gauteng for leisure purposes, with the province usually being the source of most of the weekend leisure travel to other parts of the country.
Add to this the alcohol ban, and travel elsewhere also comes to a standstill.
"As far as the alcohol ban is concerned, it is not about what we make from selling a bottle of wine. It's that I can't sell you a leisure weekend because if you can't have a glass of wine at supper or a beer by the pool, you're not interested in travelling."
The protests and looting that have erupted across the country over the past week have further discouraged people from travelling, he says.
As a result of leisure travel all but disappearing with the latest restrictions, Tsogo Sun Hotels, which has 112 hotels in its portfolio, among them The Cullinan in Cape Town and the Palazzo Montecasino in Johannesburg, has had to temporarily close between 10 and 15 of the hotels in its portfolio
City Lodge's Widegger says that because the vast majority of leisure travel to other provinces is from Gauteng and mainly on weekends, this segment has "all but collapsed".
He says with midweek business travel also being reduced significantly, the group is running at occupancy levels of "mid- to upper teens".
The group needs an occupancy rate in the "mid- to upper 30%" level to break even across its portfolio, and City Lodge was running close to this just before the third wave hit the country, he says.
"It is not necessarily the lockdowns and what those restrictions bring. Especially on the part of corporates - there is a reluctance to travel as soon as infection rates get to higher levels and we immediately see them pull back on business travel."
Just before the third wave, Widegger says, 53 of City Lodge's 56 hotels in SA had been reopened and were operating, but the group has had to temporarily close 12 of them because of level 4 restrictions.
Sun International's Leeming says it has temporarily closed most of its 13 hotels in SA in light of the level 4 restrictions, with only two remaining open.
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