Tourism under pressure

A 10 percent tourism levy based on bed rates will be charged in KZN as of April 1, 2015. The levy is to be charged on top of the one percent levy already contributed to Tourism Marketing South Africa (TOMSA), adding further pressure to an already marginally profitable industry.

Michael Mbuyakhulu, MEC for economic development, tourism and environmental affairs, said on Thursday at a breakfast briefing at the ICC Durban: “Tourism is an economic stimulant; tourism creates jobs.” The levy will create a bid support fund which will be used to secure strategic events for the province and is projected to create 180 000 jobs. Mabuyakhulu attributes the necessity for such an austerity measure to government budget cuts for KZN.

The proposal was received with mixed feelings and questions of affordability for both SMME establishments and large hotel groups were raised. The National Accommodation Association of South Africa chairperson, Sheffield resident Donovan Muirhead said: “The current cost of doing business on SMME level is 15% and a 10% levy would make it impossible for guest houses and bed and breakfasts to keep their doors open.”

Muirhead said these establishments would have to absorb the levy themselves and reduce profit margins to the level of having to retrench staff. Alternatively they would have to implement rate increases and possibly price themselves out of the market. Muirhead believes one of the possible knock on effects would be an increase in corporates opting for Skype meetings rather than traveling to KZN.

Likewise, Gail Westphal from TOMSA said this levy would make KZN more expensive to visit than other provinces, leading to a decline in occupancy rates. A British tour operator commented on an SA local tourism website (www.tourismupdate.co.za) on Friday morning: “10 percent is clearly too high, and maybe the consultation process should be done before these announcements are made – just a thought! Africa is not in a wonderful space at the moment tourism-wise, with Ebola, Kenya and new SA DHA regulations. Whether you believe it or not, all of this affects travel to SA. The bigger tour operators will start to ‘park’ Africa very soon and concentrate their spend where they can achieve a better return on investment, and less risk.”