In pre-Covid South Africa, the tourism sector contributed just over R 130 billion to gross domestic product (GDP), which accounted for nearly 3% of the country’s total GDP.
In 2018 the sector contributed 4.5% of total employment in South Africa. Today, in a socio-economic climate characterized by lockdowns and restrictions, the picture is very different. But the hardship is temporary and recovery is in sight. The tourism sector could struggle to get back on its feet this year, but by 2024 the industry will be back on track, mainly driven by the return of business travel.
According to a report published by Statistics South Africa, foreign arrivals in South Africa fell by just over 70% from nearly 16 million ren in 2019 to less than 5 million ren in 2020. The tourism and hospitality sector was among the four months hardest hit by the nationwide lockdown as of late March 2020. The sector’s decline has led to many dire predictions that business travel will never return to pre-Covid levels, but the opposite can be said .
This is the opinion of Anton Roelofse, Regional General Manager at Business Partners Limited, who argues that the overly dire predictions that business tourism will have reached a peak in 2019 to which it will not return are exaggerated. On the contrary, Roelofse predicts that the sources of income for subsectors of tourism, such as gastronomy, will be 20% below the 2019 level in the next few months, but will continue to increase.
When it comes to business travel, Doomsagers point out that virtual conferencing technologies like Zoom, Microsoft Teams, and Google Meet have emerged as an unstoppable force during the pandemic that will hamper the sector’s recovery. However, according to Roelofse, the competition for business contracts will drive business dealings up again in the new normal.
On this point, he states that “The state of business travel is largely determined by competition for contracts – face meetings. Other companies will be forced to maintain a competitive advantage and will follow suit. “
Roelofse believes that small and medium-sized enterprises (SMEs) cannot afford to go without travel. “The value of a personal conversation is practically irreplaceable and for SMEs this relationship building is vital in the long term,” he explains. “Guest houses and travel-related services would therefore be well suited to targeting SME owners who take to the streets in front of big business travelers.”
In addition, Roelofse points out the central role of congresses and conferences as networking opportunities. Conferences where academics, officials, and social leaders and activists come together to discuss ideas and policies may return a little slower because they are not driven by the same intense competitive dynamics as exhibitions and conventions. Still, Roelofse is optimistic that this form of business travel will recover as the same networking experience cannot be reproduced online.
In-company trips must also be taken into account, in which executives from the same multi-branch companies travel at home and abroad to meet for team building and collaboration. “Yes, technology has made it possible to meet remotely, but this is in no way an indication that we will not see the value of new team members meeting and communicating in person in the future,” says Roelofse .
A good example of this
Although many tourism and hospitality businesses have been brought to their knees by the complete shutdown, there are many examples of South African small businesses that have mustered the tenacity and determination to weather the storm. Among them was Business Partners Limited’s client Annelene van Wyk, owner of Undulata Country Lodge, a luxury guest house in the Northern Cape town of Springbok.
Ten years ago, Business Partners Limited funded the company that was thriving and on the verge of expansion with the Covid-19 outbreak. All business activities of the guest house were suspended for three months. During that time, Van Wyk struggled to maintain his Temporary Employee Relief Program (TERS) and pay her six employees. Business Partners Limited stepped in and helped them through the crisis with a low-interest loan of R300,000.
From mid-2020, the guests began to trickle into the guest lodge again. Her temporary presence was followed by a sudden influx of customers with a large Eskom contingent who came into town and booked out the guest house. It was an immense relief for van Wyk, who had remained optimistic that business travel would return to pre-pandemic levels and that the lodge would flourish again.
While Undulata has not yet reopened for features, the noticeable return of customers has given van Wyk the reassurance that flexibility and patience will help rebuild their business after Covid.
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