Tourist accommodation revenues drop sharply as July unrest worsens industry
The unrest in July strongly impacted the fragile accommodation market.
- Statistics SA released data on income from tourist accommodation in July of this year.
- On an annual basis it looks like there have been some good increases, but that’s because it is a weak base.
- From month to month, the situation is different, showing the huge revenue losses the sector is suffering compared to before the pandemic.
Income from tourist accommodation fell sharply in July month-on-month, according to the latest data released Monday by Statistics SA.
Investec economist Lara Hodes says this is likely due to the unrest in KwaZulu-Natal – generally a popular tourist destination.
“The predominantly KwaZulu-Natal unrest, coupled with tighter lockdown restrictions, weighed heavily on the area already battered in July,” she said in a statement, adding that “the looting and social unrest that took place in July, combined with transport interruptions to the journey, would have dissuaded many holidaymakers from coming to the province ”.
“The occupancy rate of hotels fell to 12.7% in July, from 19.4% in June. of alcohol, will have further worsened the plight of many people in the tourism industry who are struggling to stay afloat, ”Hodes said.
On a year-over-year basis, data shows that in July, all types of accommodation saw strong positive growth in accommodation revenue. The largest year-over-year increase in accommodation income was reported by trailer parks and campsites.
In nominal terms, revenue from tourist accommodation grew 237.3% year on year in July 2021 – the result of a 226.8% increase in the number of nights sold and a 3.2% increase of the average income per night-stay unit sold.
Annual increases hit a very low base in 2020. Measured on a seasonally adjusted monthly basis, accommodation sector revenues actually fell -36.8% to Rand 663.2 million in July, after the decline. -6.7% in June.
The largest negative monthly growth rates were recorded for guest houses and guest farms (-61.6%); hotels (-42.2%); and “other” accommodation (-29.6%).
Professor Kaitano Dube from the Department of Tourism and Integrated Communications at Vaal University of Technology said the latest data reflected the levels of movement restrictions the country is adopting.
It also reflects the outlook for the global market, including the “traffic light” system adopted by Europe, America and the UK, Dube said.
“While the results are encouraging and testify to the resilience of the tourism sector in general … [t]Current gains are largely driven by domestic tourism markets and there is still a need to tap into lucrative international tourism markets to achieve a significant positive market trajectory, ”said Dube.
The roll-out of the vaccination locally has also had a positive impact, which hopefully would improve further, Dube said.
BDO tourism expert Lee-Anne Bac also claims that the unrest in July had a significant impact on the very fragile accommodation market.
“Hotels that were trading at a very low average occupancy rate of 22% in June – which is less than half of what the industry achieved in 2019 – as a direct result of the pandemic, have seen their rate occupancy halved in July to an incredibly low level. 13%. The last time we say that the occupancy rate was so low, it was at the height of containment in 2020, ”explains Bac.
“Now consider that an average hotel typically needs an occupancy rate of 40% to 50% to break even. This means the industry has been bleeding money since March 2020. Now their limited market demand has been halved for the month of July. Yes. , our third wave has a big role to play in this, but the riots and looting made the problem worse. “
Bac points out that July was a holiday month in some provinces, but many people canceled their holiday plans, making KwaZulu-Natal a big loser in July. “But there is light at the end of the tunnel. Preliminary figures show that August is a much better month for hotels – almost double what they achieved in July, but not enough to cover their costs.” , said Bac.