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
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