Western Cape Finance and Economic Opportunities on Tourism sector under level 3

New data shows tourism sector hammered by the Alert Level 3 restrictions
Data from the tourism industry in December unsurprisingly reflects a sector that has been hammered by the Covid-19 pandemic and the related lockdown restrictions with almost all the top attractions in the Western Cape reflecting a more than 60% drop in visitors over the peak tourism season.
This data confirms the desperate state of the tourism and hospitality industry in the Western Cape, and considering the evidence that the Western Cape is passed its peak and the demand on our health services is stabilising, this reinforces the need to relax the Alert Level 3 restrictions that are negatively impacting the economy and resulting in, almost daily, business closures and jobs losses.
Last year, we recognised the importance of a strong summer season for the recovery of the tourism and hospitality industry that had been severely impacted by the Covid-19 pandemic last year. And so, in the knowledge that it was safe to do so, we worked hard to ensure that the Western Cape was ready to safely welcome both international and domestic visitors, and that the Western Cape was positioned as an attractive destination choice for those looking for wide-open spaces and a variety of affordable and diverse experiences.
However, we could not have anticipated the intensity of the second wave both at home and abroad that resulted in stricter international travel restrictions, route cancellations by airlines and the Alert Level 3 restrictions, all of which has had a severe impact on the tourism and hospitality sector.
International arrivals were much lower than initially anticipated for the traditional peak season.
Official ACSA passenger data shows that passenger recovery at the international terminal of the Cape Town International Airport in December 2020 was a mere 19% of December 2019 volumes. Aircraft were operating at only 51% of their passenger load factors (compared to 72% in December 2019).
This partially explains why the hotel industry, which is highly dependent on international travellers, has still not recovered.
STR (2021), who provide market data on the hotel industry, reports hotel occupancy levels in the Western Cape were at 32.7% in December 2020, compared to 68.1% in December 2019. In Cape Town, 5-star hotel occupancy levels were at 29% in December 2020, 4-star hotel accommodation at 34% and 3-star hotel occupancy at 31% occupancy. Similar results were reported for the Garden Route and the Cape Winelands.
In terms of domestic travel, vehicle counts nationally indicate that there was a reduction in the number of overland domestic travellers during the season. Traffic volumes have decreased by up to 27% on South Africa’s major highways.
The same trend was seen at our airports. The domestic terminal at Cape Town International Airport saw only 51% of the volume of travellers compared with December 2019. On a more positive note, aircraft had average passenger load factors of 72% which reiterates the importance of domestic travel in the current climate.
With the announcement of hotspots and beach closures in December, coastal towns saw immediate cancellations from domestic markets. A survey by NightsBridge, conducted after the announcement of the Garden Route as a hotspot, found that one-third of guesthouses on the Garden Route indicated at least 50% of festive season cancellations. The same study reported that 12.7% of bookings in the Western Cape were cancelled.
These reports not only show the precarious situation of the tourism and hospitality industry, but also the impact of the restrictions on the economy in the Western Cape.
As we know from the most recent South Africa Tourism Survey (December 2020), 58% of tourism and hospitality businesses were unable to service their debts and 61% of businesses were unable to cover fixed costs in October 2020. This was before the Alert Level 3 restrictions were announced in December.
Any hope of a recovery over the festive season has been lost, however the summer season is not yet over, and we still have an opportunity to ensure the survival of businesses and jobs in the Western Cape if we can urgently relax the restrictions, specifically for the curfew to start at 23:00, the beaches to open and an easing of the alcohol ban.
And so, I will write to the Minister of Tourism, Mmamoloko Kubayi-Ngubane, calling for the immediate easing of restriction in respect of the curfew, the closure of beaches and the onsite consumption of liquor in restaurants and similar establishments, as well as allowing the tasting and selling of liquor at wineries and wine farms.
I have also written to the Minister of Employment and Labour, Thulas Nxesi, to urgently extend the UIF Covid-19 TERS scheme(link is external) for the duration of the Alert Level 3 restrictions to assist businesses and employees who have been impacted by the restrictions.
The Western Cape government has focused on getting the balance right between preventing the spread of Covid-19 while keeping the economy as open as possible, saving both lives and livelihoods.
And, we will continue to work hard to support businesses so that we can save jobs and save the economy in the Western Cape.

Source: Government of South Africa

Market