Tourism, hospitality recovery likely only after vaccine rollout - survey

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The second wave of Covid-19 infections negatively impacted the hospitality industry.
The second wave of Covid-19 infections negatively impacted the hospitality industry.
  • Confidence levels for the other services sector, which includes hotels, restaurants, transport, real estate and business services, ticked up during the first quarter. Still, the industry was hard hit by the second wave of Covid-19 infections.
  • The absence of international tourists and Covid-19 restrictions have hurt the hospitality, conferencing, exhibition and passenger transport industries.
  • A stronger, sustainable recovery in these industries is likely to start in 2022, once vaccines are rolled out.

Confidence levels for the hotel, restaurant, transport, real estate and business services ticked up during the first quarter, but remain low.

The Bureau for Economic Research (BER) on Wednesday released business confidence survey results for the Other Services sector.

The Other Services sector includes hotels, restaurants, transport, real estate and business services. It is separate from the business confidence survey for the retail, wholesale and motor trade sectors.

The Other Services survey covered 370 senior executives and was conducted during the second half of February when the second wave of Covid-19 infections was slowing down and certain restrictions were lifted.

Confidence levels lifted from 27 points in the fourth quarter to 30. This is below the long-term average of 53.

The second wave of infections particularly hit the hospitality sector hard. For all of January and part of December, beaches were closed, which deterred local and international travel. The prohibition of large gatherings at events like weddings also hit the accommodation sector. "Although [it] activity picked up in comparison to the fourth quarter, it remained way down relative to the same time a year ago when the pandemic had not yet hit South Africa and international tourism," the BER noted in its report.

Restaurants also felt the impact of the alcohol sales ban as the number of patrons reduced. As restrictions lifted, however, activity picked up.

Recovery in the transport sector lost momentum in the first quarter. "Passenger transport took a hit and supply chain disturbances dented freight transport," the report read.

"The absence of international tourists, as well as Covid-19-related restrictions (such as the permitted number of people at gatherings) and anxiety, are hurting the hospitality, conferencing, exhibition and passenger transport industry in particular," the report read.

These industries are only likely to see a sustainable recovery from 2022 onwards once vaccines have been rolled out, along with the resumption of international travel.

In the real estate subsector, property sales were positively impacted by low-interest rates allowing banks to lend at more affordable prices. However, property management took strain from falling rental income and higher office and retail vacancy rates, the report indicated.

Business services were also upbeat. "A large part of the first quarter lift off could probably be attributed to the fact that firms could not further reduce or postpone contracting business services, such as computer, legal, accounting, market research, management consultancy, consulting engineering and debt collection services," the report read.

The Other Services sector is not likely to act as a growth stimulus for the economy, especially in light of a third Covid-19 wave, load shedding and a "dire" outlook for income in poorer households, the BER said. 

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