Big travel change set to hit South Africa: FNB

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Preliminary monthly tourism statistics from Statistics South Africa show that the hospitality sector is still struggling to fully recover from the harsh Covid-19 lockdown shock in 2020, with annual growth still strong but slowing.

However, the data also show that some forms of travel are simply not coming back, especially in the business sectorETF says.

While some post-Covid recovery was expected in the tourism sector in 2022, the industry has come under further pressure in recent months, says John Loos, real estate sector strategist at FNB Commercial Property Finance.

“KZN province has been hit by severe flooding twice, with the first flood occurring in April. This may have had an impact on hotel occupancy over the Easter period and possibly beyond, a generally reasonably busy period for hoteliers who may have been less busy due to flooding and damage they caused,” he said.

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“Furthermore, transportation cost inflation has soared due to soaring global oil prices which have pushed up domestic gasoline prices. Fuel price inflation has been unrelenting over the past the past year, which is expected to dampen the demand for domestic tourist travel by road, while the cost of air travel is also influenced.

These problems have been compounded by the demise of Comair, which has restricted the availability of air travel in recent weeks, and could negatively impact air travel and therefore hotel demand as well.

And then there are the factors we’ve identified as constraining tourism and hotel demand for quite some time now, Loos said.

“Firstly, domestic holiday tourists as a group are under more financial pressure than before Covid-19, due to the impact of the 2020 recession on jobs and incomes, not to mention the recent increase in CPI and interest rate inflation As much of holiday tourism is non-essential in nature, this category of spending is put on the back burner for many households while they take care of their finances.

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“Secondly, we have argued for some time that business travel not only faces similar financial constraints following the impact of the 2020 recession on business, but that the corporate sector has also managed to “zoom in “much of his interaction during forced shutdowns.”

This modern communication probably partially distances it from less efficient physical movement. Much of that expensive physical business travel may therefore never return, he said.

Loos added that many hotels may need to be less reliant on domestic business travel on a more permanent basis.

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“In short, we expect hotel occupancy and revenue improvement to continue in 2022, assuming everyone remains freer to move around as vaccine rollouts progress, across the country. world as well as in South Africa, and that the virus threat is receding.

“But the financial impact of the 2020 recession on households and businesses persists, with more recent pressure added by rising fuel and headline price inflation, and the resulting rise in interest rates. These factors are seen as holding back the pace of recovery in what is a non-essential spending category for many, so a return to pre-Covid-19 income levels for this property class may not yet occur. in 2022.”


Read: South Africa seeks to lift Covid restrictions – including end to face masks

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