The sun sets on the tourism industry… for at least a year

Two-thirds of jobs in the tourism business sector could be shed by this time next year as a result of the coronavirus pandemic, according to research and analysis just completed by Stellenbosch University’s Bureau for Economic Research (BER).

The study, “Covid-19: The impact on the South African tourism industry”, was conducted for BER clients as an economic impact assessment using tourism expenditure figures contained in Statistics SA’s Tourism satellite account for 2018.

“Our best-case scenario is estimated to result in 58.2% fewer domestic trips and 68.4% fewer inbound visitors in 2020,” said the bureau. “This translates into a loss of R171.4 billion in spending by domestic and inbound tourists.

“The worst-case scenario is expected to result in about 70% fewer domestic trips and 73.7% fewer inbound visitors. Under this scenario, internal tourism expenditure is expected to decline by R195.5 billion.

“It is estimated that over a million jobs are potentially at risk under both our best- and worst-case scenarios.”

The bureau added its “updated baseline macro forecast sees roughly 1.4 million jobs at risk through 2021 Q2 because of the overall Covid-19 shock to gross domestic product (GDP)”.

Under “normal circumstances”, it said, the tourism industry was an important driver of growth and job creation in the economy, “accounting for almost eight percent of GDP and supporting 1.6 million jobs.

“Unfortunately, the Covid-19 pandemic effectively brought all domestic and inbound tourism to a standstill.”

The tourism sector was an amalgam of industries “including accommodation, restaurants, travel agencies, passenger transportation services and sporting and other recreational services”, according to the BER.

The analysis said the International Air Transport Association “estimates that SA’s share of forgone flight sales could be more than R40 billion as 10.7 million fewer passengers are expected to fly this year. As a result, the association estimates that nearly 187,000 [aviation] jobs are at risk in SA – directly and indirectly”.

Senior bureau researcher Mia Slabber said the study had been conducted as a research note “which are in-depth analyses undertaken by BER economists and consultants.

“They are intended to inform clients on critical issues in the macroeconomic environment, which might have an impact on business.

“As soon as the Covid-19 crisis hit, we realised it would have a massive impact on the tourism sector and spill over into the rest of the economy.”

According to the analysis, “the corona crisis came when SA households were already under pressure. Going forward, we expect a big hit to household income from likely retrenchments, salary cuts and lower asset prices”.

The BER’s current baseline forecast only expects domestic consumption levels to revert to pre-crisis levels by 2023.

“This implies personal travel budgets will remain under pressure for the foreseeable future. Even consumers who are not financially constrained may be hesitant to visit restaurants, theatres and bars where it’s hard to maintain social distancing.”

– news@citizen.co.za

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