How to revive SA tourism
THE South African tourism industry has been particularly hard hit by the Covid-19 travel and movement restrictions since March last year.
To make matters worse, South Africa was identified as the source of a more contagious variant of the virus, which has made international travellers reluctant to visit. This is problematic because 60% of businesses within the tourism sector are small, medium and micro enterprises – vital to the recovery of South Africa’s economy.
There is an urgent need to resuscitate this sector and create an enabling framework to bring the business of tourism back to life. Although there are a number of state initiatives for tourism, such as the Tourism Equity Fund (TEF), the Tourism Sector Recovery Plan and the Green Tourism Incentive Programme, these are meant as stimulatory, not relief, measures.
The World Travel & Tourism Council noted travel and tourism contribute 8.6% to the South African economy and provided 9.2% of total employment in the country. According to Statistics South Africa’s Tourism 2020 Report, foreign arrivals plummeted by 71%, from just more than 15.8 million in 2019 to less than 5 million in 2020.
As part of South Africa’s Economic Reconstruction and Recovery Plan, the TEF aims to drive transformation through advancing equitable opportunities in the sector to ensure inclusive economic growth. Eligibility for funding requires that an enterprise be 100% South African-owned with a minimum of 51% black owner-management. With R1.2 billion to disperse in blended funding, the TEF is facing judicial scrutiny. Opponents of the fund argue it is a deviation from the framework of the Broad-Based Black Economic Empowerment Act and that it effectively excludes minority-owned businesses from seeking assistance.
Criticism of the fund has been heavy. In particular, questions have been raised about the effectiveness of the fund in relation to its structure. With the minimum funding value being set at R10 million, it seems doubtful the fund can facilitate meaningful transformation in the industry if it has the capacity to service only 120 businesses. This means it is unlikely to have any significant impact on the industry’s recovery. Furthermore, with such a high minimum funding threshold, a large number of smaller private tourism enterprises are also effectively excluded.
Launched in April 2021, the Tourism Sector Recovery Plan is a set of interventions expected to enable the tourism sector to recover to 2019 activity and employment levels by 2023. The plan proposes several strategic interventions, which include stimulating domestic demand, launching investment and resource mobilisation programmes, and regional tourism integration.
Although the intentions behind this plan are admirable, the timelines at this point are still unclear. This means enterprises in the travel and tourism sectors will be left to their own devices for the foreseeable future when it comes to securing their own survival and sustainability.
Until our vaccination roll-out has effectively achieved herd immunity and the skies have opened to allow international travel to resume, tourism in South Africa will continue to struggle.
Just as other industries have been forced to pivot and reinvent themselves for survival, so too will the travel and tourism industries.
In order to recover, the tourism industry can no longer expect to depend on international visitors for a livelihood. Hospitality and tourist destinations will have to re-examine their business models to make themselves attractive to domestic and intra-continental travellers, because the majority of South Africa’s most attractive destinations and establishments are expensive for locals. To do so, many businesses will be forced to examine how to do more with less than before.
In addition to focusing on increased hygiene and safety measures, cutting costs and improving efficiencies can be achieved with digitisation and automation technology, while efforts to better utilise expensive resources such as energy and water will assist with operating expenses and environmental impact. Although this will be costly for businesses to accomplish alone, it is is necessary for their survival. Given that attractiveness for visitors is going to rest heavily on safety and hygiene, tourism businesses are advised to approach their recovery and reinvention with this in mind.