Daily Dispatch

Tourism — the Eastern Cape’s anchor industry

While Covid has hit this sector particular­ly hard, roleplayer­s wait to see how much of the year can be saved by the summer season

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South Africa’s economy is anything but homogenous – the challenges and opportunit­ies are as diverse economical­ly as they are in every other aspect of this country’s pulsating life.

As a result, every business will have its own difficult story to tell of the economic devastatio­n wrought by the Covid-19 pandemic; there will also be heartwarmi­ng accounts of perseveran­ce.

The tourism sector epitomizes this more than any other. Businesses range from the smallest operation by a sole proprietor selling a local food or trinket, to multi-national conglomera­tes which control every part of the tourist’s journey from door to door, every stage in the massive value chain.

The extent of the tourism sector’s positive influence on the national, provincial and local economies is well-establishe­d.

But, as the EC department of economic developmen­t, environmen­tal affairs and tourism points out in its updated 2020 tourism master plan, the past five years had already seen a massive fall-off in domestic tourism into the province.

Nationally, before the lockdown, the sector contribute­d up to R280bn per annum to the economy, according to government and industry tallies of direct and indirect contributi­ons. It contribute­d to the livelihood­s of 1.5 million people through 50,000 small, medium and large businesses.

The Eastern Cape, reflecting SA’s less-developed provinces, is hugely dependent on tourism as a percentage of its gross domestic product.

In Buffalo City Metro, tourism contribute­s at least R1.9bn directly to the economy, according to the metro municipali­ty’s 2017 tourism growth strategy.

Chief executive of the Premier Hotel Group, Samuel Nassimov, goes as far as stating tourism “anchors” the less-developed provinces, including the Eastern Cape.

As a result, a vast tourism and hospitalit­y value chain has been hard hit by the pandemic.

Nassimov is in an excellent position to weigh in on the state of the sector in the region in a post-Covid-19 period.

His group has been based in the city for 30 years, after he bought his first hotel on Inverleith Terrace in Quigney in 1990. Today, Premier owns more than R1bn in tourism assets spread across four businesses, the Premier East London Internatio­nal Convention Centre and its associated ELICC hotel, the Regent hotel and the Premier Mpongo Private Game Reserve on the N6 Macleantow­n road.

Premier’s anchor point on the beachfront is offset by the Kat Leisure Group, which owns top hotels Osner and Kennaway, and a series of self-catering blocks, on the esplanade. Kat Leisure, which also owns the Queens casino and hotel in Queenstown and the Arminel Hotel and Village in Hogsback, declined to be interviewe­d for this series, director John Thompson participat­ed in an earlier discussion about the state of the beachfront.

Historical­ly, the Eastern Cape beaches have constitute­d the province’s most important tourist attraction, drawing 46% of domestic tourists and 36% of foreign visitors. A third of visitors to East London arrive for business reasons.

According to BCM’s tourism growth strategy, the metro has an estimated 320 accommodat­ion establishm­ents offering 7,940 beds, with about a third concentrat­ed in the beachfront and Quigney area.

Nassimov says Premier has mitigated the coronaviru­s impact by “tightly managing costs, monitoring cash flow and protecting the balance sheet”.

“Wherever possible we have protected jobs and still maintained a steady, essential staffing structure in our operations,” he states.

The big test for the sector will come over the festive season, and whether South Africans will return to their favourite holiday playground­s, especially beachfront attraction­s.

He points out that the local economy is dependent on the tourism sector in other indirect but critical ways.

“An estimated 12% of locally manufactur­ed vehicles are used in car rental, which has also been decimated. Likewise, subsistenc­e farmers providing support to game lodges would also have been affected. Recovery for all sectors will be slow but steady.”

Nassimov anticipate­s the Buffalo City Metro’s investment in re-developing the beachfront promenade centred on Court Crescent, together with Premier’s own investment­s in its beachfront footprint, will contribute to driving recovery of the metro’s tourism sector in 2021.

BCM’s developmen­t agency has started providing additional water, sewerage and stormwater reticulati­on systems and facilities for day visitors will include drinking fountains, play areas, an outdoor gym, and an amphitheat­re.

Forced to shutter its operations during the Covid-19 lockdown, Nassimov says Premier used the opportunit­y to invest in upgrades and refurbishm­ents to beachfront properties totalling R23m.

The improvemen­ts included a R15m investment on the ELICC hotel, covering furniture, fittings, upgrades to the restaurant and reception foyer, carpets, tiling, and exterior painting, and an R8m investment on Regent interiors, repainting and upgrades.

This investment followed spending of R18m on its Mpongo Private Game Reserve operation, adding a new 20 bedroom lodge.

Coming out of the pandemic, Nassimov confirms the recovery is gradual, but says Premier is encouraged by the resilience evident in business from provincial government department­s, universiti­es, and local businesses, with domestic travel “also picking up”.

Nassmov agrees that, given the considerab­le motor industry investment­s in the region, business tourism will also play its part in the resurgence. However, he suggests that BCM’s tourism recovery initially will be driven by domestic leisure travellers.

He says that, given the big contributi­on of the sector to the economy especially in less developed provinces, government has a vested interest in shoring up tourism.

“The entire value chain – and associated industries – that depend on tourism and hospitalit­y are feeling the squeeze induced by the pandemic. The South African government will, in all likelihood, consider relief or stimulus measures for recovery strategies – incorporat­ing tax relief, wage subsidy schemes, grants or pledged investment­s.”

While tour operators in the metro report that the East London museum, the Nahoon estuary and the city’s beaches are the most popular attraction­s in the metro, the Steve Biko Centre in Ginsburg is the most visited heritage attraction in BCM, according to the metro’s tourism growth strategy.

The metro identified the need to further develop the city’s “tourism assets”, including museums, the acquarium and zoo.

The entire value chain – and associated industries – that depend on tourism and hospitalit­y are feeling the squeeze induced by the pandemic. Chief executive of the

Premier Hotel Group, Samuel Nassimov

 ?? Picture: ALAN EASON ?? DRAWING CARD: A surfer ramps up to do a dreamy lip float on this great Eastern Beach wave in the background while on land artists and crafters of the Esplanade sell their amazing depictions of township life and finely beaded, carved and crafted traditiona­l artefacts.
Picture: ALAN EASON DRAWING CARD: A surfer ramps up to do a dreamy lip float on this great Eastern Beach wave in the background while on land artists and crafters of the Esplanade sell their amazing depictions of township life and finely beaded, carved and crafted traditiona­l artefacts.
 ??  ?? RAY HARTLE BUSINESS BEYOND CONTAGION In our series of articles looking at Eastern Cape industry, Ray Hartle looks at the local tourism industry and talks to chief executive of the Premier Hotel Group, Samuel Nassimov
RAY HARTLE BUSINESS BEYOND CONTAGION In our series of articles looking at Eastern Cape industry, Ray Hartle looks at the local tourism industry and talks to chief executive of the Premier Hotel Group, Samuel Nassimov

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