Steep drop in tourism accommodation income as July unrest further batters sector

play article
Subscribers can listen to this article
Unrest in July significantly impacted the fragile accommodation market.
Unrest in July significantly impacted the fragile accommodation market.
  • Statistics SA released data for income from tourism accommodation in July this year.
  • On an annual basis, it looks like there were good increases, but this is because it comes off a low base.
  • On a month-to-month-basis, the picture looks different, showing the huge losses in income the sector is suffering compared to before the pandemic.

Income from tourism accommodation fell markedly in July on a month-on-month basis, according to the latest data released by Statistics SA on Monday.

Investec economist Lara Hodes says this is likely due to the unrest in KwaZulu-Natal - usually a popular tourist destination.

"The unrest in predominantly KwaZulu-Natal, coupled with the tighter lockdown restrictions, weighed heavily on the already battered sector during July," she said in a statement, adding that "the looting and social unrest that took place in July, combined with transportation route disruptions, would have deterred many holiday makers from travelling to the province".

"Hotel occupancy rates dropped to 12.7% in July, from 19.4% in June. Moreover, the restrictive adjusted lockdown level 4 measures which came into effect late-June and ended on 25 July, prohibiting interprovincial leisure travel to and from Gauteng and the sale of alcohol, will have further exacerbated the plight of many in the tourism sector struggling to stay afloat," Hodes said.

On a year-on-year basis, the data shows that in July, all accommodation types recorded large positive growth in income from accommodation. The largest year-on-year increase in income from accommodation was reported by caravan parks and camping sites.

In nominal terms, income from tourism accommodation increased by 237.3% year-on-year in July 2021 - the result of a 226.8% increase in the number of stay-unit nights sold and a 3.2% increase in the average income per stay-unit night sold.

The annual increases came off a very low base in 2020. Measured on a seasonally adjusted month-on-month basis, income from the accommodation sector actually fell by -36.8% to R663.2 million in July, following June's -6.7% slide.

The largest negative month-on-month growth rates were recorded for guest-houses and guest-farms (-61.6%); hotels (-42.2%); and 'other' accommodation (-29.6%). 

Professor Kaitano Dube of the Vaal University of Technology Department of Tourism and Integrated Communications says the latest data mirrored the levels of movement restrictions that the country is adopting.

It also reflects the global market outlook, including the "traffic light" system adopted by Europe, America and the UK, Dube said. 

"While the results are encouraging and point to the resilience of the tourism sector in general ... [t]he current gains are largely driven by domestic tourism markets and there is still need to tap into the lucrative international tourism markets to realise significant positive market trajectory," Dube said.

Vaccination rollout locally had also had a positive impact, which would hopefully improve further, said Dube. 

Tourism expert Lee-Anne Bac of BDO also says the unrest in July significantly impacted the very fragile accommodation market.

"Hotels that were trading at a very low 22% average occupancy in June - which is less than half of what the industry achieved in 2019 - as a direct result of the pandemic, saw their occupancy cut in half again in July to a staggeringly low 13%. The last time we say occupancies this low was in the height of lockdown in 2020," says Bac.

"Now consider that an average hotel typically needs an occupancy of 40% to 50% to break even. This means that the sector has been bleeding cash since March 2020. Now their limited market demand was reduced in half for the month of July. Yes, our third wave has a big part to play in this, but the rioting and looting compounded the problem."

Bac points out that July was a holiday month in some provinces, but many people cancelled 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 - close to double what they achieved in July, although not enough to cover their costs," says Bac.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Facebook is facing a fresh crisis after a former employee turned whistle-blower leaked internal company research . Do you still use Facebook?
Please select an option Oops! Something went wrong, please try again later.
Yes, the benefits outweigh the risk for me
26% - 350 votes
No, I have deleted it
44% - 585 votes
Yes, but I am considering deleting it
30% - 394 votes