The tourism sector needs urgent collaboration by Government, labour and business to assess the feasible rebates and reductions that can be put in place to secure the short-term survival of tourism and hospitality businesses.
This was highlighted by FEDHASA National Chairperson, Rosemary Anderson. With level three amendment restrictions in place in South Africa for at least another month – as announced by president Cyril Ramaphosa earlier this week – industry leaders have expressed the need for further relief for the tourism sector as the recovery of the sector has been pushed back even further.
“In the face of such adversity, how can we provide the oxygen that our industry needs right now for its survival, through negotiating rebates, payment holidays, etc., from third-party suppliers, interest-free loans, etc?
“These are questions that should be tackled through structured engagement with business and government now,” said SATSA CEO, David Frost.
He said the inbound industry association supported the Tourism Business Council of South Africa in its call for immediate financial relief for the tourism and hospitality sector.
“Without it, and without the normalising of operations soon, we will see immense additional job losses. For many it is already sadly too late.”
What can be done?
Tes Proos, Chairperson of the South African Events Council, suggested to Tourism Update that the following intervention measures should be considered by financial institutions (with support from government):
- additional payment holidays/reduced payment structures
- a moratorium for interest charges for at least six months
- directive from government to financial institutions and creditors to enforce the above to avoid liquidation before we have a chance to recover
She highlighted that, when national lockdown was first implemented, some payment holidays ran for three months, others for six months and some institutions agreed to a further three-month reduced payment option.
“But no one is interested in extending relief any further. People are now going to start losing cars and homes. Insurance and medical aid is pretty much a thing of the past for many people in our sector,” Proos said.
She pointed out that funding for tourism businesses was a major challenge, noting that restrictions on BEE level-3 and lower companies for funding was “fundamentally wrong” during a crisis and should be re-addressed under the circumstances.
“Another challenge is the unwillingness of financial institutions to extend payment holidays. We need this for at least six more months,” emphasised Proos.
Anderson suggested that South Africa’s financial services companies that focused on the tourism and hospitality sector could look for inspiration from what other countries have done, such as the UK, where interest-free loans have been extended for a period of 12 months.
“The loan could either be repaid in 12 months or paid over six years at a fair current interest rate. This has saved many British companies, which have also enjoyed support from a furlough scheme through which 80% of an employee’s salary was paid up to a fair limit,” she explained.
According to her, loan repayment holidays could also be re-introduced, as well as business and property rate holidays, a reduction in fees for liquor licences and a reduction in certain licence fees. “Every little bit will help these tourism and hospitality businesses to survive.
“It is a matter of trying to keep the very taxpayers and customers you rely on still in business, by perhaps reducing your own income in the short term. Losing them entirely would be worse than making less profit from them in the immediate future,” said Anderson.
She pointed out that the cost of these reductions and savings to the sector would be far less than the cost of more businesses closing, and more jobs and livelihoods being lost. “It is a time for all to compromise in order to save the industry.”