Tourism Business Council SA response to COVID-19 Risk Adjusted Strategy


09 June 2020
Chairperson: Mr S Mahumapelo (ANC)
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Meeting Summary

Audio: Tourism Business Council SA response to COVID-19 Risk Adjusted Strategy

The Tourism Business Council of SA (TBCSA) said the country cannot afford to destroy its tourism sector which contributes 8.6% of GDP. It wants government to lift restrictions on international travel earlier than planned and to present clear plans on when the tourism sector will be fully operational. The government could soon find itself in a race against time to revive the tourism industry to avoid 1.2 million job losses in the sector. The Council believes presenting clear plans and dates will allow agencies to prepare bookings, give customers the confidence of returning to SA and save the summer tourism season. According to TBCSA, domestic leisure and corporate travel are expected to resume on 1 September and international borders will only be open by March 2021 missing South Africa's high season.

Members spoke about livelihood versus lives and profits above people. They asked about sector transformation; reliance on international business; working with Home Affairs; the effect on South African tourism if it does not does open earlier; demographics of TBCSA membership; training of tour guides; extension of the UIF TERS; and overuse of foreign nationals in tourism jobs. The Committee Chairperson commented that the sector has been severely affected and would need all the support it can get.

Meeting report

Introductory remarks
The Chairperson noted that South Africa has responded well in the face of the COVID-19 pandemic. This pandemic has affected the Tourism Sector more than any other sector as it relies and survives on the movement and interaction of people. Right before the pandemic arose, Tourism was struggling with contraction, unemployment especially among young people hovering at 56%. South Africa is the most unequal society in the world and COVID-19 and unemployment worsen these conditions. The Tourism Department wants to ensure that they contribute in the national effort to help with these conditions. There has to be a gradual approach with the reactivation of the Tourism Sector.

Tourism Business Council of South Africa briefing
Mr Blacky Komani, Deputy Chief Executive Officer of the Tourvest Group, said that TBCSA believed that it was important to meet with the lawmakers and inform them about what they have done and ask for the Department of Tourism's assistance to discuss how tourism will come out of this pandemic as a sector. TBCSA is a private sector-led organisation that is made up of various associations and it represents the majority of the sector.

During the COVID-19 lockdown, they have worked through the government with the Minister of Tourism on what to do with arriving passengers from abroad. TBCSA had decided to make an amount of R30 million available to help with the quarantine and isolation required for arriving passengers. They look at the Western Cape as a specific case because of the unprecedented growth of the virus there.

Various TBCSA members presented on Tourism’s extraordinary effort to survive COVID-19 Pandemic:

Tourism Sector guiding principles during COVID-19

• The health of the citizens
• The law enforcement aspect
• Economic activity to preserve the sector
• Equity – benefits for all.

Economic Value of Tourism in SA
• Total GDP contribution is 8.6%
• Export industry – R120 billion forex
• Total jobs supported – 1.5 million
• High numbers of SMMEs – ± 49 000
• Total spend in 2018 – R273.2 billion
• Casinos and Restaurants – R18.9 billion and R33.8 billion.

Greater Economic Impact
R206.5 billion in Capital and supply chain
• >12.5% of locally manufactured vehicles (car rentals+)
• 8% direct impact to retail sector
• Further impact on: Manufacturing, Services, Fuel, Construction and Agriculture.
The comprehensive sector protocols for COVID-19 deal with protective processes, access control, health and safety interventions and social distancing. The protocols have been reviewed and confirmed by epidemiological and public health experts. With the aim of flattening the curve, TBCSA has worked with the Department of Health and developed and tested protocols for quarantine and isolation and accommodation. It has been involved with essential workers accommodation and repatriations both in and outbound.

Impact of COVID-19
• The tourism sector was in decline even before disaster announcement
• Industry at a standstill and closed down during lockdown – 1 June small re-start
• Over 1000 companies applied for UIF TERS ± 35 000 employees
• Companies thinking of liquidations and retrenchments
• ± 50 000 tourism businesses close temporarily or permanently e.g. Comair Express
• ± 555 000 – 600 000 tourism direct jobs could be lost in 2020
Impact beyond tourism
>1.1 – 1.2 million jobs in total
• Agriculture, manufacturing – vehicles, textiles, furniture, chemicals - banking, retail, construction
• Conservation major impact and risk (SANParks 72% revenue from tourism)
• Environmental crime increase – hunger and reduced anti-poaching and security.
The latest impact studies on the sector were discussed (see document).

The importance of the inbound tourism industry was explained and the effect of the loss of an entire high season if the closed borders were opened only in March 2021. TBCSA outlined its Recovery Strategy.

Tourism is starting to open up globally in Europe and other countries – opening for in-bound and out-bound travel, and various plans and dates have been announced such as in Germany, Italy and Spain. Packages can be created that are safely contained destination bubbles, bridges and corridors.

For Tourism’s future after COVID-19, TBCSA requested a phased earlier easing of restrictions of safe transport, safe accommodation and safe attractions. South Africa with its warm climate can operate in outdoor spaces, learn from best practice from other destinations that have opened up; it is already in trial mode with domestic travel and airports. However, many businesses will still struggle to survive without international tourism. We cannot afford to destroy more that 8.6% of the economy.

It requested government investment in the sector and made suggestions such as the UIF TERS program continue for longer than the current three months; financial relief program for companies with turnover of more than R300m; and SMME relief program fund must be increased from R200 million.

Way Forward
Advisory group will work with experts in the Presidency, Department of Health, Treasury and elsewhere to finalise the phased de-restricting of safe operations and financial support.

The industry will invest in and test safe operations. The industry will support and assist SMMEs to operate safely. The industry will continue to push transformation, increase purchasing from BBEEE businesses, training and empowering women, youth and communities and continue to contribute revenue to the fiscus via levies and taxes.

Mr Z Peter (ANC) said he was impressed by the presentation. South African tourism needs to help the economy grow. The President has made a call that it would not be business as usual. However, if they do not make decisions as a matter of urgency and if they do not make commitments to open the border by a certain date, then they cannot accommodate those who want to visit the country. Within the next six to eight months, this sector that plays a large role in growing the economy must start to revisit the way of doing things. The reliance on international visitors must come to an end, we rely on countries that have the potential to destroy themselves and countries that have their own turmoil. How can we begin to rely on those countries? As South Africans we need to find a better and different way of doing things, so we do not have to rely on other countries to grow the economy and provide jobs for our citizens. Within the next year, we need to look at ourselves to ensure that these issues are addressed. More time needs to be spent on growing domestic tourism. He was unsure what they are doing wrong because the rating agencies keep on pushing them down, which is contrary to what the presentation shows. It shows that they is doing well and helping South Africa grow its GDP. This shows that the work that they are doing has no significant impact on the impression the rating agencies have of them.

Mr K Sithole (IFP) said that the presentation was eye-opening in showing what the recovery strategy will be for COVID-19. He asked how they will control liquor as there are many accidents and deaths due to liquor restrictions easing up. There are a lot of jobs being lost because of the pandemic. What systems are in place to respond to the loss of jobs? There was no mention of transformation and he requested TBCSA to provide more illustrations on that matter. With the bookings, how many have been cancelled so far. He asked if they have spoken to the Department of Home Affairs (DHA) about visas and access control.

Mr M De Freitas (DA) said that TBCSA has had interactions with the Minister and provided all the information to the Ministry about what would take place if South African tourism is not opened up soon. Does the Minister understand and agree with the information given by TBCSA and is she considering to motivate to her colleagues within government that South African tourism open up before December?

Mr G Krumbock (DA) said it would be difficult to identify countries which are now safe from COVID-19 and targeting those potential international visitors because South Africa still has to reach its infection peak. What makes TBCSA confident that we will be able to attract people, who are coming from a relatively safe environment to our country which is yet to go through the worst of COVID-19, according to government estimates? If the situation returns to normal by the end of the year, what does TBCSA believe the total number of direct and indirect permanent job losses will be? Directly and indirectly, South African tourism provides 1.5 million jobs, 750 000 of which are direct. Some provinces are relatively safer such as Mpumalanga and Limpopo that can be looked at to reopen. However, the method of testing varies between provinces and there might be different definitions on the cause of death. Is TBCSA confident with the fact that they are not comparing apples with apples and provinces with fewer infections may not be as safe as they look.

Mr P Moteka (EFF) pointed to transformation and that the TBCSA delegation is made up of mainly white males. It needs to be asked where the people of colour are in the executive positions, and this needs to be looked into. TBCSA is asking for them to look at its equality but the Committee is also recognising its inequality and that is totally unacceptable. South African tourism contributes a lot to this country, Africa and the world. When there is talk of GDP, money and jobs, what also needs to be spoken about is how many have been infected and died. Those statistics were not mentioned and the lives of people are not considered because TBCSA is here to present that South African tourism needs to reopen by September, but he disagreed. Infections have risen rapidly and now TBCSA wants to reopen, and this is very reckless. He agreed that they cannot risk 8.6% of the GDP, but you cannot risk lives as well. Once the infection rate has decreased greatly, then all sectors can work together to recover the economy. TBCSA must put figures online on the number of infections.

Mr H Gumbi (DA) said that he was covered by Mr Krumbock's questions.

Ms M Gomba (ANC) asked about the jobs that were not given to South Africans who have the potential to serve in South African tourism but are neglected by businesses in the rural areas. They need to be employed. Some of the employers are trying to avoid the Labour Relations Act and the National Minimum Wage Act by hiring foreigners instead of South African citizens. Foreigners have the right to be employed, but they are preferred because of the lower wages they are willing to receive. Did TBCSA consider employing both? Training was raised as a concern for tour guides who need other languages. South African tourism needs to train tour guides so they learn other languages and can be part of tourism in our country.

Ms S Xego (ANC) raised a concern about UIF. Some businesses applied on behalf of their employees but it takes some time for the business to transfer those UIF amounts to their employees. She asked for a response to this, noting that this was just an allegation and the Committee does not have proof. TBCSA needs to bring younger people into the organisation as COVID-19 affects those above 50 years old negatively. Sometimes business interests are put forward at the expense of human lives. Employees’ lives are affected but they continue business as usual without taking the necessary measures to save lives. How will they guard against employees and employers being infected by COVID-19? To observe social distancing, there cannot be travelling between cities, which means that price increases will be exorbitant. How will TBSCA promote movement and are the government interventions not enough? How does TBCSA follow up with its members to ensure that they comply with COVID-19 regulations and protocols? As a Committee, they think they have already played a role in tabling a request to the Minister of Tourism to mobilise more resources to promote South African tourism and the individual businesses. As a Portfolio Committee, they consider not only the TBCSA members but tourism in general as long as this will help South African tourism in the strategy for boosting the economy.

Ms L Makhubela (ANC) said that it is unfair to want the government to state the dates when the country will be able to open for South African tourism. Government will not be able to do that if we have not reached the peak of the pandemic yet. All the countries mentioned in the presentation were able to give dates for opening borders because they have reached their infection peak and were able to manage the pandemic. TBCSA asking for UIF TERS to continue after three months is contrary to what it says will happen in the future if South African tourism opens. TBCSA is a private sector organisation that is led by industry role players, but there is no representation of the workers in this industry. There has been exploitation of workers in the past where they have employed foreign nationals without following proper procedures. Is TBCSA going to consider representing the workers such as waiters and hotel workers as they do not have a voice?

Mr Moteka disagreed with TBCSA comparing South Africa to other counties like Germany because it is very different. In South Africa, we are racially divided, and in those countries, they are not.

The Chairperson said that TBCSA will be availing some of its infrastructure to accommodate people who are going to be contracting the virus and who have already contracted it. He suggested that they not only mention the Western Cape facilities but mention all those they have provided throughout the country. The R30 million to help with safety concerns is appreciated. The Committee would like to know TBCSA's attitude about the court action taken against the Department of Tourism over its. It would have been better for both Solidarity and AfriForum to have met with the Department of Tourism to discuss and understand its rationale for using BBBEE as the criteria for its COVID-19 relief policy.

The Chairperson suggested annual interactions with TBCSA to look at the progress made with its targets. He raised the matter of villages, townships and small towns, and said the Committee will never leave out its concern for these areas. Poverty and unemployment are embedded in these areas and will TBCSA aim to have more memberships in these areas? They should develop a partnership with those in South African tourism in these areas of villages and small towns. The Committee agreed that every September it will communicate the progress made in the transformation of the tourism sector.

The Chairperson proposed that TBCSA should provide a package to SADC, to show them what the benefits are of visiting South Africa. TBCSA needs to make tailor-made packages for people from Africa as from a marketing perspective, it makes sense. With the land issue, things need to be made clear about policy uncertainties. There are two certainties about the land. One is that due to colonisation the land was taken from them by the colonisers. The second certainty being that these issues are being raised through government and people are reclaiming their land. The banks must give clients five-year loans so that businesses are sustainable. Licensing discs for one to five years for businesses means that South African tourism will have money on hand to use. The gradual aggressive reopening of the Tourism Sector is very important, as well as focusing on the numbers of infections and fatalities.

TBCSA response
Mr Komani responded that they are not looking for an abrupt opening of South African tourism and a gradual opening is key. The approach has always been that lives are more important, but there has to be balance and the data in the presentation was used to show a comparison between livelihood and lives. The two are interlinked. TBCSA is transforming and still needs to transform more. Compensation against disaster needs to be provided for those who were previously marginalised.

In response to Mr Moteka, Mr Komani said TBCSA is taking over the Tourism B-BBEE Charter Council in partnership with the National Department of Tourism and the Minister has agreed. Going forward, the BEE Council will be funded on a 50/50 basis. This will give TBCSA a chance to transform in a greater way. TBCSA will provide their progress since 1996. This pandemic has impacted our business, it is not business as usual, and we cannot solely rely on international business. On the number of cancelled bookings, the members of TBCSA will deal that. TBCSA has a good working relationship with Home Affairs and they are dealing with the unabridged birth certificates and visas.

In response to Mr Freitas on what will happen if South African tourism does not open, he said that businesses will close. In the company Tourvest, which is made up 6 500 people, they have already started retrenching 1 000 employees. There have been huge salary cuts but no business can survive without revenue. South Africa has a competitive advantage and it should not allow South African tourism to die. Hence, they are appealing to the Portfolio Committee on Tourism to help TBCSA. There is no set period within which TBCSA wants the sector open.

On Mr Moteka’s concern that there are people of colour that are members of TBCSA and that the majority are not only white males, equity figures will be provided. Being part of the BEE Council will help with the transformation. TBCSA will come back with numbers on the training of tour guides.

Mr Komani replied that lobbying is happening, but for the right reasons and they are not asking for a mindless opening of the borders. TBCSA have to look at the peaks and is not pushing profits above the people. On its private sector representation, TBCSA was created to help South African tourism to market itself internationally and the private sector established it in 1996.

Mr Tshifhiwa Tshivhengwa, TBCSA CEO, responded about UIF. They have signed a memorandum of agreement with UIF and the Department of Labour. So far, they have seen over 100 000 applicants, and these are from people whose companies do not have money to pay their employee salaries. This number of applicants is increasing over the months as companies no longer have reserves to pay for employee salaries. TBCSA follow the COVID-19 regulations strictly, and anyone who does not comply, they talk to them to ensure compliance. There are 600 000 direct jobs that are potentially going to be lost if the industry does not open up soon. This industry relies on domestic and international travel, car rentals, hotels and so on and we have to protect these jobs. They are not aiming to make a profit but to break even because they are going to have to create a demand and ensure that trust is gained from travellers across the world and in the country. If they break even, the value chain of tourism will functional and those SMMEs that are dependent on tourism and domestic tourism will be able to function. TBCSA sees what is happening on the ground and the impact it has had. 76% of the tourism industry are black people so this is affecting employees across the board. He agreed the sector may have various shortcomings with foreign nationals and they are working on that.

The Chairperson thanked the TBCSA members for voluntarily coming to engage on the Tourism Sector. There is a Committee responsibility for oversight on many different levels. There must be a general overlooking of the policy process within government and its implementation.

The Chairperson adjourned the meeting.



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