JSE-listed hotel and leisure companies that were hoping to recoup lost revenue with a summer boom from overseas travellers are now banking on locals to pick up some of the slack after the UK kept SA on its red list for travel.
Graham Wood, Sun International Group COO for hospitality, said this week the longer it takes for SA to be removed from the UK’s red list, the tighter the window becomes for UK travellers to plan trips to SA. The UK’s “traffic light” system is reviewed every three weeks, with the latest update on September 17.
Wood said November to March is typically “our peak tourism season” as many British travellers book year-end holidays to escape their winter.
The UK is Sun International’s biggest international market and also SA’s biggest tourist market. According to Stats SA, 430,000 British citizens visited SA in 2019.
But with the country still on the red list, anyone travelling from SA to the UK (including UK citizens returning from a holiday) has to quarantine for 10 days at their own expense, which can add up to R40,000 to the price of travel and makes SA an unattractive destination.
The UK said it kept SA on the red list in the latest review because of concerns over the Beta variant, one of the Covid mutations first identified in SA. The decision fuelled fears in SA that the once-vibrant tourism industry, which has already shed 470,000 jobs during the pandemic, will be decimated further.
The South African government has also been sharply criticised.
Tshifhiwa Tshivhengwa, CEO of the Tourism Business Council of SA, believes that if the South African high commission in London had responded more urgently and effectively, SA might be off the UK red list by now.
“They needed to get involved much earlier. As soon as South Africa was red-listed they should have started dealing with the issue. The high commission should have immediately initiated negotiations with the relevant government departments in the UK and then organised a co-ordinated South African response,” he said.
If the Beta variant was the issue for the UK authorities, the high commission should have communicated to the UK government and its scientific advisers the response of the South African health department and scientific community, even arranging for local scientists to meet their counterparts in London if necessary.
Had this been done from the start, SA would not have been blindsided at this late stage by the UK government's “ill-informed fears” about the risk of infection posed by the Beta variant, Tshivhengwa said.
The department of international relations & co-operation, through the high commission, should have kept industry players in SA in the loop so they could have communicated more knowledgeably with their trade partners in the UK.
Tshivhengwa also believes South African missions abroad should have made better use of international media, such as the BBC and CNN, to communicate what SA was doing to manage the pandemic.
The red-listing setback has prompted the leisure sector to intensify efforts to attract local holiday-makers.
City Lodge has launched a “summer special” campaign with discounts of up to 30%. “Cabin fever from many months of staying at home has led to pent-up demand for travel,” said COO Lindiwe Sangweni-Siddo.
The City Lodge Group, which owns the Courtyard, City Lodge, Town Lodge and Road Lodge brands — mainly catering to local travellers — has also been hit by the decline in business travel during the pandemic. Along with other hotel groups it has temporarily shut some hotels — seven of its 63 hotels are closed. The group has seen an increase in visitors from Zimbabwe, Namibia, Botswana, Lesotho, Mozambique, Swaziland and Zambia, and the US and India are also in its top 10 source markets for travellers, said Sangweni-Siddo.
In the past, British travellers accounted for a significant proportion of the foreign guests at some of the group's more leisure-focused hotels, particularly in the Western Cape, she said.
“In 2019, the UK was in the top 10 and the share was around 5% on a group-wide basis. In 2021, the UK accounts for a less than 1% share,” Sangweni-Siddo said.
Sun International CEO Anthony Leeming said though the lack of tourists from the UK will have a financial impact on the group, “it is not significant given our larger reliance on our casinos and the local market”.
He said the group was experiencing “very high demand from the local tourism industry, which we are targeting”.
“At the same time we are not ignoring our traditional markets, which could open up at very short notice.”
The US, for example, on Monday announced it would relax its restrictions on travellers from SA in November, without giving a specific date.
In recent weeks Germany and Mauritius have also opened their borders to vaccinated South Africans.
Marcel von Aulock, CEO of Tsogo Sun Hotels, said: “The UK is the biggest source market for foreign travellers by air. Staying on the red list means that market is closed, and that’s clearly affecting demand for our hotels, particularly in Cape Town and Johannesburg.”
He said bookings for German and US travellers were already picking up. “There is undoubtedly significant pent-up demand for local and international travel. All our resorts are full for this long weekend.
“If we can get the restrictions in our international markets removed and we can get corporates to reopen in South Africa, the industry should be firmly on the recovery path,” Von Aulock said.
The share prices of Sun International, City Lodge and Tsogo Sun held up this week, with analysts saying the bad news may already have been priced in and many investors in these stocks hold them for the long term.
Although share prices for hotel groups have gained significantly, the rise is off a low base — prices plummeted when the pandemic first hit SA.
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