In a virtual meeting, the Committee heard a series of presentations by representatives of the South African tourism industry, which painted a bleak picture of the sector as a result of the local and international impact of the COVID-19 pandemic. Members also engaged further with a presentation from the previous meeting on the State of the Nation Address and its implications for tourism.
The meeting heard details of businesses that were closed, and others that had drastically reduced their staff complements or cut salaries. The vast majority were facing a financial crisis, not only because of the challenges of the past year, but because of uncertainty regarding the future. The government’s “stop and go” decisions had not been helpful, and the closure of beaches during the peak tourism season had been devastating.
The identification of a “South African variant” of the Covid-19 virus had unfairly led to South Africa being targeted as a country for tourists to avoid, and a strong marketing campaign was needed to counter this. Major lucrative events, such as the planned Lions rugby tour, were in jeopardy because of this, and forward accommodation and flight bookings were already being cancelled.
The sector urgently needed financial assistance from the government. It was being burdened by heavy costs of licensing vehicles that were standing idle in the absence of tourists, paying rentals and rates on offices that were empty, and paying grading levies for accommodation facilities that were not being used. The tourism industry was one of the biggest contributors to South Africa’s gross domestic product (GDP) at 8.6%, and also contributed significantly in terms of jobs supported, and to the high number of small, medium and micro enterprises (SMMEs), and the total spend and foreign exchange earnings. The country’s economic recovery was heavily dependent on tourism, but this would not be achieved if its businesses did not survive.
Members were told that the small players in the industry were particularly hard hit, as the major firms were unable to offload their normal quota of peripheral tasks to them. The Committee was concerned that this was delaying transformation in the sector, and suggested government focus on holding its functions at the facilities of these struggling small operators.
The tourism industry was pinning its hopes on the success of the vaccination programme to revive the sector. It also highlighted a rapid antigen testing process of 15 minutes, now in operation at the V & A Waterfront, which could make it possible to host big crowds at major events.
When the State of the Nation Address (SONA) came up for discussion, a Member referred to the President’s mention of the Presidential Climate Change Coordinating Committee. She said that tourism would be heavily impacted by the predicted extreme weather events. The President had spoken about mitigation, resilience and adaptation, and the Committee needed to be forward-thinking and look at adopting a strategy or a plan to mitigate against the worst impacts of climate change, especially on coastal tourism communities, and inland where severe drought is projected. It should encourage operators to submit plans so that the worst impacts could be offset, as it was going to have a devastating impact on the economy and biodiversity.
Another issue arising from the SONA was job creation. Through the tourism sector, there was a need to work on the issue of employment of people from South Africa being given first preference, especially if people had experience in the work. The Chairperson suggested that perhaps the Committee should state something in a policy about having not less than 80% of the workforce being South African, or something similar.
Chairperson’s Opening Remarks
The Chairperson said that in its meetings, the Portfolio Committee (PC) had agreed to have engagement with the banks, so that it can check with the banks the extent to which, over and above the COVID-19 interventions, they have played a role in ensuring that they make life a bit easier for those potential entrepreneurs and existing entrepreneurs in the tourism space. The banks had requested the PC to reschedule, and it had asked Tourism Business Council of South Africa (TBCSA) to come instead. He thanked the team for coming at short notice.
The PC would engage the banks at a later stage through the Banking Council of South Africa (BASA), because it wants to look at what each specific bank is contributing to the strengthening of tourism in the Republic of South Africa. It also wants to look at the plans that the banks have to further grow the tourism sector in the country, and the extent to which banks make it easier for people to access funding. It also wants to understand that if there are defaulters among those enterprises existing --what are the percentages and what are the reasons behind people defaulting and ultimately exiting from such assistance from banks; the extent to which that has an impact not only on their enterprises, but on the general social aspects, such as how people take care of their families, and so on. The PC would have that discussion with the banks at the right time.
The reason for the TBCSA coming is so that the PC is on the same wavelength on the extent to which COVID-19 has impacted on the tourism sector. Currently, what are the possible permutations going forward? How has the tourism sector itself been resilient and if it has been resilient in as far as the impact is concerned? What are the lessons and how does one use those lessons to mitigate against future risks?
South Africa’s Tourism Industry: Covid-19 Impacts
Mr Blacky Komani, Chairperson of the Board, Tourism Business Council of South Africa (TBCSA), made opening remarks.
He said the last meeting with the PC was on 9 June 2020, which was when South Africa was in the early stages of this devastating virus. The TBCSA had been hopeful that by the end of 2020, things would be different. Two months into 2021, and things have not changed much. It was in that meeting where the Chairperson said in one his statements that poverty and inequality was prevalent in small villages and dorpies. If one looks at where things are now, things have got worse. This has been very hard for all. It is on this basis that the TBCSA appreciates that it can have platforms like these as a sector. It can approach the PC, which has always been open to engagements of this nature to talk about the challenges they are encountering as a sector, and where they need the assistance of the PC.
The Chairperson had asked if the industry had been resilient or not resilient. His response was that they were in the intensive care unit (ICU). The only saviour that the sector has is domestic travel. That has limitations because of the economic situation of South Africa. But tourism is still here, and the hope is that it is going to be here for a much longer time with cooperation between the TBCSA and government, and with frequent conversations with the Minister of Tourism.
The TBCSA had a strategy session last Thursday which the Minister came to address. He said one of the biggest lessons that TBCSA had learned is the importance of cooperation between the public sector and private sector. That is what has given it breathing space.
He mentioned what issues the PC can help the TBCSA with. The TBCSA appreciates that the President has extended the Temporary Employer/Employee Relief Scheme (TERS). It helps, since the TBCSA has seen some of its staff members losing their cars, their houses, being evicted, and children’s reports not being released because parents have not been able to pay school fees. These are things that all have been dealing with, and the TERS extension will come in useful to relieve some of the pressures. The TBCSA appealed to the PC going forward, because there is no magic solution to the current situation. This virus is not just going to disappear. It has reached a stage where the TBCSA appealed for the extension of TERS, especially for the tourism sector, which has been devastated.
Since frontline staff are the reservationists, the tour guides, the people at the forefront of dealing with guests, these people should be considered for vaccination sooner rather than later. The TBCSA heard the good news from the Minister last Thursday, that frontline staff will be considered for vaccination in phase 2 of the vaccine rollout. That gives the TBCSA an ability to market, to say that when guests who have been vaccinated arrive, they will be in contact with staff who are vaccinated. For that, TBCSA had help from all of its partners, be it in providing logistics and accommodation, the venues for people to be vaccinated, etc. The TBCSA had put up a sum of R12 million to help facilitate the vaccination of its staff.
The third issue where the TBCSA was looking to the Committee for help was the Lions Tour, which is a rugby tour that travels outside the UK every four years. It is scheduled to be in South Africa in July/August. The TBCSA is not sure if that is going to happen. If one looks at the economic impact of the tour, it is enormous. He appealed to the Committee to talk to colleagues in the Department of Sports, Arts and Culture to get to the bottom of whether this tour is happening or not. This country needs it. The TBCSA understands the challenges of gathering, it understands the challenges of managing the infection rate. At some point, the economy needs to move forward. The TBCSA would be happy to work within the constraints of making sure that it does not create a super-spreader event.
The TBCSA knows that the Easter weekend will have some restrictions in order to try and manage the spread of the virus. The TBCSA is appealing that such restrictions should not have a detrimental effect on the sector. South Africa should not consider closing inter-provincial travel, because that will kill the little that is left in the tourism industry.
The TBCSA still has a major problem with vehicle payments, and does not seem to be getting to a resolution of that. He appealed to the Committee to talk to its counterparts in the PC on Transport, to find out what the issue is in this area. If people cannot register their vehicles, then even if tourism is open, and people want to come to South Africa, some people might not be able to operate because of the permit issue. That is “an own goal.” Obstacles need to be dealt with and removed.
The TBCSA also needs help with coming up with a unified message as a country. There had been news of the “South African virus,” and the fact that 41 other countries had a similar variant is irrelevant. The question is how to counter that narrative. Minister Zweli Mkhize came out strongly in the early days and countered it, but South Africa needs to have a unified message to say, “This is not a South African virus if the other 41 countries never had residents that had visited South Africa.
Members of the TBCSA would give an overview of what was happening in their sub-sector of the tourism industry and their personal experience of COVID-19’s impact on the industry.
Total Value of Tourism to South Africa
Mr Tshifhiwa Tshivhengwa, Chief Executive Officer (CEO), TBCSA, said the tourism sector is one of the biggest contributors to South Africa’s gross domestic product (GDP) at 8.6%, and also contributes significantly in terms of jobs supported, the high number of small, medium and micro enterprises (SMMEs), the total spend and foreign exchange (forex) earnings.
The tourism industry has a huge impact on locally manufactured vehicles. It buys 12.5% of those vehicles for car rentals. With the lack of demand, manufacturers of vehicles have been impacted. There had been an 8% direct impact on the retail sector. There is also a major impact on manufacturing, services, fuel, construction and agriculture. When tourism suffers, many other sectors suffer as well. Many other jobs are lost along the value chain of tourism, including indirect jobs linked to tourism.
IFC Survey – October 2020 – Before 2nd Wave
In October 2020, before the second Covid-19 wave, a survey was done with the International Finance Corporation (IFC), TBCSA and the Department of Tourism, and reported the following findings on tourism businesses:
• 28% closed – of these, 5% of the total had closed permanently.
• Optimism was less than in May 2020 – 85% felt pessimistic or very pessimistic about the future for their business.
• Revenues: 92% were down 50% or more, with 36% reporting 100% lower revenue.
• Forward Bookings: 78% were down 50% or more, with 23 % reporting 100% lower forward bookings.
• 58% of businesses were unable to service their debts.
• 61% were unable to cover fixed costs.
• 90% of businesses had reduced wages -- 58% for more than 50% of their staff, and 40% had reduced wages for all their staff.
• 77% have furloughed staff – 28% more than 50% of their staff.
• 11% have made more than 50% of their staff redundant and 7% have made all their staff redundant.
• To survive, 55% indicate they will need financial support.
The Industry had been in crisis, but the outlook was better. Now the outlook is worse.
Mr Tshivhengwa added that businesses may not be able to retrench staff, because they do not have money to pay the retrenchment packages.
Domestic summer season
Mr Tshivhengwa said that domestic leisure travel alone is not enough for the size of the tourism industry. Initially the season looked reasonable for domestic leisure – particularly for out-of-city destinations. Then, on 15 December, there had been full beach closures for the Eastern Cape and Garden Route, with a massive swathe of cancellations. In a normal season, there were 2.1 million trips and more than R2.9 billion of destination expenditure.
Plettenburg Bay Tourism’s quarterly survey of tourism businesses revealed up to 70% cancellations.
R674 million was lost between October and December (mainly December) by accommodation facilities and tour operators, with 271 permanent staff losses and 433 temporary staff lay-offs. 97% of businesses operated at a loss for the quarter, after an already disastrous prior six months.
Then, on 28 December, KwaZulu-Natal (KZN) and all Western Cape beaches, rivers, dams, lakes and parks were closed. Alcohol sales and restaurant and bar consumption was banned, and there was a 10pm closing time. The same impact was repeated for New Year and half of January, with restrictions now across all but Northern Cape beach destinations. Sit-down restaurants lost all but some lunch-time trade, which also impacts on domestic holidays, as people want to enjoy restaurants and alcohol on holiday.
Importantly, foreign tourists were also not interested in a holiday in South Africa if they cannot enjoy alcohol.
International tourism – effects of the “South African” variant
On 30 January, a United States Presidential proclamation stated that “immigrant and non-immigrant entry into the United States will be suspended for individuals who were physically present within the Republic of South Africa during the 14-day period preceding their entry.” USA citizens can return from South Africa – but perceptions were affected by the current travel advisory: “Reconsider travel to South Africa due to COVID-19. Exercise increased caution in South Africa due to crime, civil unrest, health and drought.”
The United Kingdom imposed a flight ban, and no holidays were permitted. SA was on list of 33 countries requiring compulsory quarantine at travellers’ cost (R35 000) in a hotel, based on presence of “variants.” Some countries’ borders were totally (or almost) closed, such as Norway, and Portugal.
Some had special requirements for South Africa, such as Ireland, Croatia, Czechoslovakia, such as quarantining or more tests. Airlines not flying to South Africa include Emirates and Virgin, and the rest had significantly reduced schedules, except for Qatar.
Countries closed to travellers from South Africa were:
The Netherlands – plus flight ban
Spain – plus flight ban
Mr Tshivhengwa added that South Africa will have to do a clean-up from a public relations (PR) point of view so that South Africa is not stigmatised as a tourist destination. The so-called South African variant is not as contagious as it was thought to be, and it was not as severe as it was thought to be; results are coming out. There was a need to be careful in communicating these messages to make sure that South Africa is not seen as a country that has this stigma, but as a country that is brilliant, and making sure that they navigate the COVID-19 situation and sequence the genomics of this virus, and make sure that SA can play in this space as one of the leading countries in terms of identifying and sequencing the virus, etc.
How SA’s second wave and Covid rates compare
Compared to selected major generators who have closed borders to South Africa, its second wave was small – only Germany was marginally smaller. SA’s current infection rates were lower than most,
its upward curve gradient less steep than most, and the second wave did not spread more rapidly than the first. Although the second wave was bigger than the first, it was nearly all contained in two provinces, KZN and the Western Cape.
Domestic tourism is subdued
Domestic corporate travel is subdued due to:
• Economic contraction – lower levels of corporate activity result in reduced travel budgets, in order to contain costs.
• Internal corporate advisories for no or minimal travel, as part of COVID risk policies.
• No government travel due to similar approaches to COVID risk and budget constraints.
• No meetings, exhibition, congress/conferences or incentive travel – the 50-person meeting limit and general approaches to COVID risk mean this major sector of the industry is still effectively closed
Domestic leisure travel is still subdued due to:
• Less discretionary income for travel and leisure, as far more people are unemployed or on significantly reduced salaries.
• General fears and concerns about the risk of travel during the COVID pandemic.
• No events, festivals, sports spectator events, mass participation sporting events, concerts and the like, which support significant levels of domestic leisure travel.
Mr Tshivhengwa said the current situation is dire. There is a trickle of foreign tourists – mainly work and family related travel – with less use of hotels and tourism businesses -- and a handful of hardy leisure tourists. Since the travel bans and second wave narrative, cancellations were being made for the second half of 2021, right through to December. The British Lions tour is likely to be cancelled or postponed, or have limited/no spectators. UK and Ireland fan bookings for travel are already being cancelled. This is a major tourism event, and would be a great profile raiser and inspire confidence in destination South Africa, just when it is needed. About 27 000 visitors would have come, generating around R1.1 billion in revenue for the tourism sector.
There was a highly subdued domestic industry, with very limited domestic leisure tourism from mid-January to March. Tourism Marketing South Africa (TOMSA) levy collections indicate that in December, the tourism industry was at 30% of prior December levels. The expectation is that January and February are worse.
STR hotel data revealed that December hotel occupancies were at 37%, compared to 60% the previous December -- across fewer operating hotels, and at 15% lower rates. January hotel occupancies were 20% compared to 57% the previous January– also across fewer operating hotels and at 23% lower rates. These are loss making operating levels, as hotel break-even points vary but are usually above 40%. The Garden Route and Port Elizabeth were particularly hard hit.
At Cape Town Airport, domestic passengers in December were 51% of the previous year’s levels, while international passengers were at only 19%.
The Temporary Employer/Employee Relief Scheme (TERS) had been extended till mid-March, but this is not enough. Businesses with strong balance sheets rode out 2020, but were now running out of cash. Businesses continue to close, and jobs continue to be lost.
How can Committee assist tourism industry?
The Government Loan Guarantee Scheme needs to be revamped. This is something that TBCSA has been lobbying for through the National Economic Development and Labour Council (NEDLAC) processes to say that it is not favourable for tourism businesses. Tourism’s recovery cannot be looked at the same way as other sectors. It is not going to be short-term -- it is going to be medium- to long-term. Tourism is a resilient industry, and it should be able to recover to is previous levels, and even go beyond them.
Vaccinations and managing the narrative around the “South African variant” had been mentioned by Mr Komani. All those in communication from a Government point of view had to get on that, and communicate positive messages across the world so that South Africa can begin to manage its brand.
Tourism needs early communication of a potential lockdown. If there is going to be a third wave, the industry needs to be prepared for that. The industry cannot have a situation where it is using the same instruments that it has been using for the past year or so. “Start and stop” is not good for business, and it does not bring confidence, especially for international travellers, because they do not want to be travelling to a place where they do not know whether they will be allowed to do X, Y or Z when they arrive. South Africa needs to be better prepared for how it communicates, and how it deals with regulations. It has to make sure that its regulations are conducive for the South African environment, promote tourism, and promote the recovery of tourism, both for small, medium and micro enterprises (SMMEs), medium businesses, independently-owned businesses and those companies that are listed.
TBCSA members’ experiences with impact of COVID-19
Association of Southern African Travel Agents (ASATA)
Mr Otto de Vries, CEO, Association of Southern African Travel Agents (ASATA), said ASATA has had to close its offices, which it has been running on behalf of the trade for almost 65 years. The Association’s small team had gone virtual. Even within the context of what ASATA is able to do to continue supporting the travel sector; he is in the process of halving his team. Those who are left are taking salary cuts to try and mitigate against the full closure of the organisation, which has steadfastly stood in support of this industry for 65 years.
The travel agent industry focuses primarily on three core competencies -- corporate travel, government travel, and leisure travel (both domestic and outbound). On the corporate side, there is still heavy restriction on travel, and understandably so, as many companies are reviewing their duty of care obligations. Government travel is also severely curtailed. On the leisure domestic side, the South African travel agent sector has never been very prominent. With the way that industry and businesses are shifting, there is an increasing blurring of lines between leisure travel and business travel, and a lot of people are becoming a lot more flexible, and so with it hopefully down the line, there will be more opportunities to combine leisure with those that are working remotely. That is purely speculation at this stage.
As it stands right now, many businesses have closed down, and thousands of jobs have been lost. Many of those travel agents will never return. Those that do will be in a virtual environment. ASATA has seen, for example, that one of its very large retail groups has closed 40% of its stores. ASATA is seeing roughly 10% of sales year-on-year, which gives one an idea of the scale and sense of what the losses have been for this industry. It is not sustainable in the medium- or long-term if the industry does not start to see a fundamental shift, because 10% is not a future for an industry.
Board of Airline Representatives of South Africa (BARSA)
Ms Zuks Ramasia, CEO, Board of Airline Representatives of South Africa (BARSA), said there are 32 member airlines, and 19 of those are not operating. The other 13 are operating at a reduced capacity. In order for those airlines to continue operating, they had to reconsider the fares and make them as low as can be, which is also not sustainable for an airline which takes ten hours to come to South Africa, for example. These airlines are doing that because they want to remain open in the market.
BARSA provides them with input, such as positive information about South Africa. There is the policy uncertainty of “stop and go”. The airlines say they do not see South Africa as a country having one common message that is succinct, and which is talking about good things such as South Africa’s protocols in place that are fit and proper to deal with the scourge of COVID-19. These airlines say that South Africa is not speaking from one voice as a country. She thought that that was one of the things South Africa really has to work hard on. There is a lot that has been done in South Africa that is positive, which needs to be put out there. Narrative is very important. On messaging about the variant, Dr Mkhize had addressed it, but this information needs to be continuously put out, so that people gain confidence in all the work being done in South Africa to fight COVID-19, and not allow it to be labeled as a “South African variant”.
In 2020, global airlines lost about R118 billion. It is projected that in 2021, losses will be about US$38 billion. In 2020, African airlines lost US$3 billion, and the projections for 2021 are about US$2 billion. There was about 75% decrease in passengers internationally. Domestic decreases were about 48%. Capacity losses were about 68% on international flights, and domestic losses were about 35%. All of this requires all to stand together and do something to ensure that all communicate active and positive messages about the work done by government and the private sector, to let people know that South Africa is travel-ready, and ready to accept visitors in a way that is comfortable for them. There are protocols in place that are fit for purpose.
Mr Shaun Maher, Market Vice President: South Africa, Marriott International, said the hotel sector has been very hard-hit by the impact of the virus, from having to close almost all hotels during the initial lockdown. After that, when hotels were allowed to open in June, very few hotels did so because there was such limited demand. Gradually, over the latter months of last year, many hotels did reopen, but most were at very low occupancies. There were some very strong positives in September/October, where a lot of hotels were performing remarkably well, mainly owing to South African leisure travelers wanting to get out. In October, international airlines started flying back. In the leisure areas, the sector was starting to perform satisfactorily, and it was optimistic about the Christmas holiday period. But because of rising infections, which then led to increased regulations, this optimism came to an immediate halt. The alcohol ban and beach ban especially impacted the hotel sector.
Today, hotels are by and large operating, but at very low occupancies, especially in the larger cities, and specifically in Cape Town, where the sector can no longer receive large groups, be they booking for conferences, events or sports, etc. Over the last number of weeks, the sector has been impacted by the reduction again in international flights, which impacts the industry not only because of the passengers on the flights, but also because of the sector accommodating the crew from a number of the international flights. There are hotels which have never reopened.
Over the last month, more hotels have closed their doors. Many of the hotels in South Africa are trying to reopen, both to get whatever business there is, and importantly, to reduce the loss of employment. There has been job loss, and this has impacted all levels. The sector has tried to reduce this as far as possible by putting most, if not all, employees on to reduced pay. For this reason, the sector was very grateful to be able to claim for UIF-TERS, and hopes that it will be able to do so again from March.
The hotel sector remains hopeful going forward. It is hopeful that the decline in the infection rate will continue, that the vaccination rollout will go well, and that thus business travel will improve. There has been little or no revenue for nearly a year now, and reserves are almost drained, even those businesses which had strong balance sheets. If the sector does not have an improvement, there will be more closure of hotels, more loss of business, and thus jobs. There is an average across the sector of 30% occupancy. This is balanced by some hotels which have managed to have good occupancies in the leisure sectors. Unfortunately, many hotels are worse than this, especially in the last month to six weeks. There have been many hotels operating in the low teens from an occupancy percentage perspective. There were many nights where he saw occupancy reports in the single digits. These hotels are desperately trying to stay open, but it is not sustainable at these occupancies if they continue for much longer. The sector hopes that TERS will come into play from the beginning of March.
On the British and Irish Lions rugby tour, the hotel sector is holding a number of block bookings, and if the tour can still happen, it certainly could save a number of areas in this sector. It believes that from a hotel sector perspective, it has proven itself successful at accommodating local and international sports groups, specifically cricket groups. With leisure travel being the only real source of revenue, the sector hopes that it will be able to get leisure travel business over the Easter weekend period.
Thebe Tourism Group
Mr Jerry Mabena, CEO, Thebe Tourism Group, said the big thing for Thebe, as a new entity with two hotels coming on-stream after the purchase of the tourism business, has been dealing with funding issues. He would be very curious to hear how the Portfolio Committee deals with the banking issues, because There has been a victim on that particular point, where it still had obligations to repay banks, to fulfil interest obligations and capital repayments, even in situations where one does not have guests coming in. It had to deal with those kinds of issues in the middle of negotiations. The PC would also be aware of the insurance claims that some of his colleagues would also be dealing with, particularly the Santam Group, and how that has been very badly handled. Thebe has been hard-hit, but it keeps going, and keeps looking forward.
National Accommodation Association of South Africa (NAA-SA)
Ms Rosemarie van Staden, Chairperson, National Accommodation Association of South Africa (NAA-SA), said this is a devastating time for the guesthouse industry. “We see that a lot of members are committing suicide. We see that a lot of members are closing down. It is heartbreaking to see that a guesthouse of 22 years in the industry cannot cope any more, and that they have to close down,” she said.
Selling is not an option -- there is no-one that wants to buy guesthouses at the moment, and banks do not fund the industry. The industry relies on the TERS that is not completely available, and does not cover all the expenses. The industry desperately needs funding, and she thought that Government also needs the guesthouses, because guesthouses have a different approach in life that it brings to guests. The tourism sector cannot do without the hotels, and it cannot do without any other places. The rates and taxes “are killing us”. Although guesthouses are running on 10%, or 30%, or 5%, they still have to pay their rates and taxes, but with no income. It is a chain reaction, and banks do not offer any support.
See Southern Africa (Seeza)
Mr Septi Bukula, Founder and Director, See Southern Africa (Seeza), said the organisation is a small and medium enterprise (SME) tourism network. It is not an association in the traditional sense; it is a business acquisition and sharing network, which means that members go out and find business, and share it among SMEs so that they grow.
A year and a half before COVID-19 struck, Seeza directly facilitated business worth R5 million into the pockets of SMEs. As COVID-19 started, it was on schedule to exceed that number by a good margin. During COVID-19, Seeza has been linking SMEs to inbound business events. With COVID-19, those business events have either been postponed, or cancelled. Those were the opportunities that were lost to get money into the pockets of SMEs. Seeza also found that the runways of SMEs are very short, so if one hears from the big players how they have been impacted by COVID-19, and multiply it by a significant factor to work out what the impact has been on SMEs, then one can see that the “runways” are very short. Reserves are not deep, so if SMEs do not operate, then that is a tremendous impact on them.
Last year, Seeza ran a series of webinars, together with the provincial direct marketing organisations (DMOs) across the country called “Stay in Business”. The aim was to give SMEs tips and tools to deal with the pandemic. The misery was heartbreaking. Sometimes at the end of webinars, Seeza organisers would be crying just from listening to people’s stories. In the face of the misery that all players in the industry, large and small, are experiencing, Seeza sees a glimmer of hope. It sees what it calls the “COVID-19 dividend,” and the appeal it wants to make is that people do not squander it.
For many years, a lot of programmes were put in place by a range of players (national government, provincial government, etc.) to support SMEs. Seeza did a survey of tour operators within Seeza towards the end of last year, and it found that those programmes are missing the mark, because they were mismatched regarding what they were offering compared to what SMEs were really looking to get in order to grow their businesses. For Seeza, the COVID-19 dividend is this: There is an opportunity to rethink and relook at how SME support is done going forward. If things are done in the same way as before, this experience will have been in vain.
Seeza has made submission to the PC previously when submissions were requested, and it hopes that the thoughts it submitted receive consideration. As a network set up just for business acquisition and sharing, it has had to pivot in a big way to figure out how it supports SMEs. One of the biggest drives it is embarking on now is a massive digitalisation of SMEs. Seeza is driven by the belief that unless it does that digitalisation, and if SMEs are going to come back, whenever post-COVID-19 is going to be, and operate the same way as before, such businesses are going to be left behind. Its massive digitalisation drive of SMEs is to make sure to get SMEs to adopt technology in a big way. Technology is changing business models across the spectrum in the industry.
Seeza’s appeal is that the government will work with it to take a fresh look at how it approaches SME development, make sure that programmes put in place are informed by the real needs (not imagined needs) of SMEs, and that programmes are in conversation with SMEs.
Professional Hunters Association of South Africa (PHASA)
Mr Dries van Coller, Consulting Executive Officer, Professional Hunters Association of South Africa (PHASA), said he wanted to reiterate what his colleagues had said -- it is a dismal situation that the tourism industry finds itself in, especially in the rural areas. Where transformation projects have been embraced, it has been seen that these communities have not been able to survive because South Africa has no international guests visiting the country. The loss of jobs and the suffering cannot be overemphasised.
There is a need to come together to understand how to go forward from here. There was no support from the banks as such, especially in rural areas, where there is a dire need for support. These are industries that contribute about R3 billion annually to the fiscus from the international market, and about R12 billion in the local market. At this stage, the industry is functioning at about 5% to 10%, which is “really, really scary.” There are fears of loss of biodiversity, because farmers have no other alternative at this stage to look at alternatives, and see how they can generate income. If South Africa loses biodiversity, it loses a major attraction to South Africa, as wildlife is one of the major contributors attracting people to South Africa.
Southern African Association for the Conference Industry (SAACI)
Mr Glenton de Kock, CEO, Southern African Association for the Conference Industry (SAACI), said the point taken from the Minister when industry members met with her last year is that the industry probably has to show confidence in action. A meeting like this for the sector anywhere in the country meets the current regulations, because there are 42 people, in line with current regulations. That would have gone a long way in driving confidence in action.
There are challenges around funding and banking. A key area of concern is around losing expertise and supplies, and losing professionals as well. SAACI has done research in the last few weeks to show that while a lot of the events and meetings have been pushed into the third and fourth quarter, if the sector does not quickly move with confidence in action and get people moving -- both the government in South Africa in terms of departments as well as corporate South Africa -- it will lose more skills. It could sit with a good forward book, but not have the expertise to roll out those events and activities.
As a sector and as an association, it did three things fairly well last year: It did a proof of concept to prove that the safety regulations can work, and it did a Restart Expo to ensure that exhibitions can work. Thirdly, in December, to ensure that live events can work, it did a rapid antigen testing process of 15 minutes, which means that with testing, one is tested before one goes into an event. One is thinking about the Lions Tour.
As a sector, SAACI is ready to host people, and to get people back into arenas and stadiums. Mr De Kock thought that it was about that confidence that the sector needs to work with Government as the private sector, to show that it can host these activities and events going forward.
Mr Michael Tollman, CEO, Cullinan Holdings, said his organisation covers various businesses within the tourism industry, from transport, inbound tourism, outbound, corporate, leisure and travel agencies. He would focus on inbound tourism as requested by Mr Komani. Mr Tollman is also part of a global group, and he wanted to give some insight there.
The group invested in South Africa after 1996. Cullinan Holdings’ journey with COVID-19 started in March. The first big step was in July. It went to all of its customers around the world, and assessed what would happen to tourism in South Africa. The assessment was that for the next two to three years, the industry would be substantially smaller. Unfortunately, it had to implement redundancies of a third of its workforce. It was completely on the basis that Cullinan Holdings saw the sector being much smaller.
The next decision it had to make was: It had no business at that stage -- it hoped that international visitors would come back in September, and that domestic tourism would come back in August. A third of its workforce had to then be put on to temporary leave just before July. Employees could receive a payment from the Unemployment Insurance Fund (UIF) every month. It added R2 500 a month to that. The balance -- a third of the workforce – have, since last March, been earning between 40% and 60% of their salary - this applies to every single member throughout the company.
The guides have no income; they were self-employed. Cullinan Holdings managed to support the guides financially until August, but had to stop after August. It then set up monthly funds for food packages for the guides, but it had to stop that in December. July was a turning point, and so was November. In November, tourism was expected to come back, and it expected international tourism to come back. It did not come back, and things got worse. South African business is around 10% of what it was. The first month that business came back was in December, which was 2%, and that stopped.
December was a turning point in two ways. Positively, vaccines came out as an answer for the industry. Negatively, the industry has seen things get far worse. The next point on the journey is February, and things are much worse for the staff in particular. A third have been retrenched, a third are on UIF, a third are on 40% to 60% of their salary for well over a year. Mr Tollman became emotional at that point and had to pause his presentation.
Ms H Winkler (DA) wrote in the chat box: “I’m so sorry.”
Mr M de Freitas (DA) wrote in the chat box: “Tourism affects real people!”
The Chairperson encouraged Mr Tollman to take his time to recover. It was understandable to the Members -- they knew of the difficulties faced by the industry.
Mr Tollman continued that in February, when staff were working from home, Cullinan Holdings decided to come back to its physical offices. Most staff said they could not afford to come in twice a week. It had wanted staff to come in to help them mentally, because after this time, they were deteriorating mentally while working from home. It wanted to get staff in two days a week to help them mentally. However, when they said they could not afford to get in via public transport, it could not help everybody -- its reserves were running out -- so it just said that everybody should stay at home, and do the best that they can at home.
They were hearing stories that many of their guides are on the street. It helps them where it can, but it is “just too big.” The banks were helpful in the first three to four months, but they now seem to see tourism “as a pariah,” and it is not possible to get support from the banks. The support given to staff has also run out. Staff are now losing their homes. They cannot pay school fees, and that is why they cannot pay for public transport.
Cullinan Holdings’ transport companies still have to pay for licences, but there has been no business in transport in a year. That is an additional heavy burden for transport companies to carry. These are significant sums for small companies and big companies alike, who are sitting with massive assets while they try to get through this period.
Mr Tollman said when he looked ahead, and compared South Africa to Cullinan Holdings’ companies around the world in places such as Australia, America, the UK and Switzerland, to name a few, all had support for their staff through government or bank loans. At that level, such companies are getting through this better than the South African industry and sector as a whole. Other countries’ vaccine programmes are starting, and what worried him was that South Africa will be left behind in the next six months, which is the rest of the journey. That for him is the most important point.
“Of course, we are suffering, our staff are suffering, and TERS to be extended further would be a huge help to be able to carry on, for many companies in the sector,” he said. However, the game-changer, the only way out, is vaccines. Without that, he thought that most companies would have shut their doors today. As one sees other countries getting the vaccine, that is where the focus for tourism is going to be. One hope that will make a big difference, is the hope that South African frontline workers getting the vaccine will be a message that can be put out as soon as possible, because the sector is trying to take bookings for 2022 and 2023, with some companies focusing on opportunities around the world.
The only way for the sector to recover by September is if it can get a message out to say that its frontline tourism workers are vaccinated, in order to encourage tourism back into the country. One of the priorities will be to have some sort of date that by the end of July, for example, frontline workers can be vaccinated. That would be a huge message, and the sector can then go out around the world to positively support South Africa. The sector can do that, as it has the relationships to do so. Frontline workers being vaccinated would be a game changer for the sector in starting to take bookings now, so that it can get deposits in, and companies can then pay their staff going forward. For many companies, this is the worst point now, and many “are just going to give up” in Mr Tollman’s view, based on what he is seeing. He apologised for “losing his composure.”
Mr Komani said the PC Chairperson “understands our pain,” and he thought that other Members of the PC understood as well.
Tourism Marketing South Africa (TOMSA)
He gave the floor to his co-chairperson, Mr Franco Jordaan, who chairs Tourism Marketing South Africa (TOMSA), which is the collection arm of TBCSA. Mr Jordaan sees it from that side, where he has seen the dwindling of the industry’s collections.
Mr Jordaan said he wanted to echo what fellow board members had said. With the levy income, the PC was well aware of the amounts that the industry is collecting and then contributing towards South African tourism and the programmes that it is doing. That has reduced to about 30% with the pain that the industry has faced over the last months. It will have a massive impact on South African tourism and its funding.
He wanted to take cognisance of the fact that income will be heavily under pressure going forward. As others had said, it is not something that is going to end very quickly. TOMSA remains positive, and it will support wherever it can, but “that is a reality that we need to face.”
The Chairperson thanked Mr Komani, and the team who had made necessary additions to the presentation. All Members of the Committee understand the situation in which the country finds itself. His philosophy is that challenges are necessary platforms for success. “When we are in difficulties, we are now called upon to go into our reserves of innovation and positive energy, of making sure that we don’t lose focus on the strategic objective of pacing ourselves properly in everything we do.”
Ms M Gomba (ANC) agreed with some of the issues that were raised by members of the TBCSA, especially on the impact of COVID-19 on tourism. She wanted to find out how the tourism fund from the Small Enterprise Finance Agency (Sefa) is seen as something that is going to assist the tourism sector. She was not sure if the TBCSA members were aware that the Department of Tourism (DOT) had just launched the Sefa tourism funding model, for new entrants to tourism and those already in the sector. How does the TBCSA see this tourism model assisting the tourism industry, especially with businesses? How many people who are South Africans, and who were employed in the tourism sector, lost their jobs? She was concerned about the number of people who are not from South Africa who are employed in the hospitality industry throughout the country, and who are underpaid and not paid according to the Wage Act, since they are not protected by South African laws. Now that there is COVID-19, such people are impacted, and could not benefit from the UIF. How many South African people lost jobs, and how many foreign nationals lost jobs in this industry?
Mr H Gumbi (DA) said that it was a very painful presentation, listening to the difficulties which are happening in the sector. Of all the sectors, tourism in particular is the one that has been hurt the most. He and other colleagues had been upfront about how they had not been happy with the Government’s management throughout this pandemic, and how it has been unable to assist to ensure that entrepreneurs are able to continue to provide services, to continue to employ people, so that South Africa is not just losing jobs needlessly. The balance has not always been struck, and sometimes South Africa has been a bit late to the party, in being able to feel the pain that some people have been feeling who are not in very secure jobs or positions.
Noting all of that, he wanted to move a resolution, whether it is adopted now, or whether it is workshopped as a Committee. He wanted to move a Committee resolution that the Minister of Finance should consider a bill provides relief in the form of tax breaks, such as the levies that these businesses have to pay, in order to have a kind of “holiday,” or so that they can have money that they owe to the municipalities written off. That is important, because the government needs to provide whatever relief it can to many of the businesses in the sector. That can be extended to breaks related to the Grading Council -- that kind of relief is something that all Members agreed on.
For flights coming in to South Africa, bringing business tourists, leisure tourism, etc., there should be relief on those taxes as well. He said that Members could go back and forth about funding airlines, but the number one thing that they can agree on is to reduce the amount that it costs for tourists to be able to come to South Africa. Removing a portion of the amount of taxes that are being paid, would ensure that South Africa is the cheapest place tourists can come to, and when tourists think of coming to Africa, they think of South Africa first. Resolutions would also include the acceleration of events such as the British and Irish Lions tour, included as a package of relief specifically for the tourism sector. He thought that that would go some way to assist the tourism businesses.
There are a number of areas where the PC can say to the Finance Minister that he needs to intervene. The PC agrees across party lines that the tourism sector is hurting badly, and it is a sector which employs hundreds of thousands of people. It is not just machinery at work here -- these are real people in the sector. The PC could put together a basket of three or four proposals, which will cut across party lines, to be able to say to the Minister of Finance that all Members agree that this matter is urgent, it is within the Minister’s powers, and Members can bring them to Parliament. He wanted to put the resolutions as a matter for consideration by the PC. It could talk about the specifics, but it could at least immediately be upfront on the table.
Ms P Mpushe (ANC) said that she was at the airport. She was going to ask a question, but there was background noise.
Mr P Moteka (EFF) started to ask a question, but the Chairperson asked Mr Moteka to change his Zoom background, which had the logo of the EFF on it, commenting that “the by-elections are still far away!”
Mr Moteka said that South Africa was in unfortunate times, especially the tourism sector. Everybody can understand the pain that the industry is going through, especially workers and management. The PC must take extraordinary action. He supported the move by Mr Gumbi to communicate with Treasury. In talking to Treasury, the PC must have a plan on what the money will do in case this situation does not stop. He asked if COVID-19 relief funds had had any positive impacts on this situation, and if positive outcomes can be shown besides the negatives that the PC knows of? He wanted to know if the intervention of Government helped.
Will the tourism equity fund (TEF) help to boost the sector, more especially the transformation part of it? He wanted to see if the operators and the main players see this initiative by the government as something that is going to assist, and if the previous fund assisted. Besides what the government is already doing, what are the ideas which it has in mind to protect and sustain the tourism industry better? His understanding was as at the yearly lekgotla, those who get together throw ideas into the pot, and then the group hears from different people with different experiences. He wanted to hear what else government thought that it can do, besides what it is already doing.
Mr De Freitas said the PC had seen the devastation that had been caused in the last year or so. What had really devastated the tourism sector worse -- had it been some of the regulations that have been passed, or the pandemic itself? For example, in December there was the disallowing of the use of beaches, when they should be encouraging people to be outdoors, not indoors. People should have been encouraged to be out and about, on beaches, etc, “because that is where the virus does not thrive.” What are the kind of things that really caused decimation of the sectors and sub-sectors, and the whole tourism value chain? He wanted to know what the TBCSA team says about the latest actions that government has implemented -- from the original relief fund, and also the fund for the tourist guides, and the recent TEF. How would the TEF assist the sector? When would that kind of assistance happen materially, in realistic terms?
Ms H Winkler (DA) thanked the PC for allowing the industry stakeholders to convey their personal accounts of how the pandemic has affected them and their industries. It was “really painful to listen to, and as a human being, it is actually devastating that so many businesses and individuals have really been impacted by COVID-19, and then the lockdown”.
People in the industry look to government for leadership and support. She felt that the government was failing to do what is necessary to inspire confidence in the industry, and make people feel that it has their best interests at heart. There were concerns raised over the banking industry and how it is not coming to the party. She thought that Mr Gumbi’s suggestion of approaching the Minister of Finance, and looking at cross-departmental collaboration, is very important. For example, she had been lobbied by members in the Private Charter Passenger Association, who have been forced to pay licensing fees during the lockdown, despite being unable to operate. This goes into the hundreds of thousands of Rands. Members also have to do vehicle checks every six months, even though they are not operating. That has been going on for the entire past year. This forthcoming year, members are expected to renew their licences once again, and pay hundreds of thousands of Rands, when there is no certainty that they will be able to operate this year. There has also been no attempt by government to help them by saying, for example, that it will transfer the licensing fees from last year to cover licensing fees for this year, or give a fee remission, or give a refund so they can use that money to save their businesses and to retain employees.
Some people are facing insurmountable debt. They are bankrupt, and the entire sub-sector is a small indicator of the sector at large. It has been completely decimated. Once the South African economy opens post-COVID-19, tourism will play a large role in boosting the economic recovery in the country, but if it does not have local tourism operators, there is no way that it can accommodate international tourism, and accommodate a burgeoning tourism sector in the future, to help recover. Government needs to put in place tangible plans and assistance so that it ensures that it keeps the tourism sector intact as part of its economic recovery. With the banking sector, there was talk of how other countries have approached tourism, and how they are approaching tourism operators. There was talk of government loans, incentives, tax breaks, and the banking sector really coming to the party. Perhaps South Africa could look at these international success stories and adapt that to a South African context, but also try and come up with something tangible to address that.
Ms L Makhubela-Mashele (ANC) said the state of the tourism industry is very bleak. It is devastating. The PC has to work with the industry players and government to make sure that tourism is revived, and gets back on its feet again. That can be done only if all stakeholders put their efforts together. One cannot point fingers at anyone, because they know that all this is as a result of the devastating impact of COVID-19. However, from here, how South Africa decides to revive the sector will be entirely people’s own efforts.
The COVID-19 pandemic has hit this sector hard. Throughout the world, the industry that has been hardest hit is tourism, because tourism, by its nature, wants human interaction, physical interaction, and people congregating, whether it is in clubs, restaurants, or business events. The PC wanted to welcome the proposals that were put forward in the meeting by the SAACI representative, who has given the PC an innovative way to say that that industry is thinking ahead, and with those rapid tests, tests can be done, results can be given, and people can converge, and have conventions, workshops, or other events. The PC needs to look at these technological advancements that assist the tourism sector that were put forward, so that it knows that when people converge, the dangers are eliminated. Scientists have said that super-spreaders are people coming together. Tourism spaces unfortunately thrive on people coming together.
It has been seen that some of the lodges which rely heavily on international travelers have not been able to open up. South Africa has been put on the red alert list because of this new variant. What the PC needs to put to Government is the proposal of positive imaging of South Africa. If one listens to many news networks talk about this new variant, they are talking about “the South African variant.” The UK also had a variant, but there is minimal highlighting of it. As she sat in the meeting, she did not even know the number of the UK variant, but before networks can talk about it, they talk about the South African variant. One can see how networks have projected Africa, and South Africa; when they talk about the variant -- they talk about its ferocity, and say that it is 50% more contagious than any other variant. As South Africa is putting out efforts to talk about the variant, it needs to talk about a positive projection of South Africa. News networks seem to listen more to scientists. South Africa needs scientists to repackage a positive communication of how South Africa has been able to deal with this variant. Currently, South Africa is “out of the woods.” The infection rate is now going down. If South Africa can repackage how it is dealing with the new variant, that would be helpful.
South Africa was told that in April, it is likely to be hit by a third wave, which means that it was still perhaps going to see a new variant from the one that it was seeing currently. What can South Africa do to avert the devastating impact of this third wave? Ms Makhubela-Mashele had lost three family members in January. Nobody in the meeting can say that they did not see the devastating impact of COVID-19, and how the second wave hit South Africa. The wave hit South Africa when it had “let its guard down”. South Africa needs to continue to put this message across, that even as the tourism industry begins to open up slowly, it is speaking the positive message of never letting its guard down, otherwise she did not think South Africa would be able to pick up the pieces if it loses more family members. She was still in mourning for the three family members that she lost in January. She wanted to inform the TBCSA that the PC was trying, as government, to repackage South Africa, because it has seen how South Africa is now portrayed. The devastating impact of COVID-19 has also been seen in the tourism industry.
Ms Winkler wrote in the chat box: “Cross-departmental co-operation is necessary: finance, transport, health. I think joint sittings would go a long way.”
Ms Makhubela-Mashele responded in the chat box: “Very true. We need a repackaged positive message of South Africa as a safe destination.”
The Chairperson asked Mr Gumbi to repeat one of the points of his recommendations.
Mr Gumbi said that he was willing to give a draft if the Chairperson wanted draft resolutions. The PC needs to help the sector, and the best way it can help the sector so that it can continue with entrepreneurship is to get the Finance Minister to relieve it on tax levies, often owed to municipalities, and also to the Grading Council. That has been an agreement across all political parties, because he assumed that that would involve a money bill. There also needs to be relief regarding domestic and international travel -- the idea is to get as many people into those establishments as possible. There also needs to be a reduction in licensing fees and transport. It has got to do considering what the key things are that government has to do in order to reduce that burden on these businesses, so that they have fewer costs and are to function better.
The Chairperson commented that several Members had talked about National Treasury. He also wanted to say that the PC must talk to its counterparts in the provinces, to help it to engage the provincial treasuries, so the PC and its provincial counterparts become one voice towards approaching the National Treasury around proposals that relate to tax obligations, and all other obligations, which include rates and taxes, etc. The different scenarios will need to be examined – for example, if treasuries are to forgo those funds completely, what will the impact on the fiscus be in terms of revenue, so that an agreement can be reached.
Linked to that is the banks. The PC will have to talk to the banks more strongly when it meets the banks very soon. The presentation did not talk much about how the plans around transformation have been impacted upon by the fact that participants in the industry are finding it difficult to breathe from a revenue point of view. Therefore, it seemed that there is not much emphasis among enterprises that were planning transformation on using their own revenue to effect transformation. For example, the wild game industry mentioned how tourism has affected it. Even if it is not done in this meeting, the PC may have to receive something from TBCSA with its own analysis on how tourism, in as far as transformation is concerned, has been impacted upon by COVID-19, and how to mitigate against that.
One cannot postpone transformation. There cannot be a scenario where transformation is postponed because of COVID-19, because the situation for those who are in the tourism sector, but who are at the initial stage of tourism, and those who are still planning to enter into the tourism sector, is very difficult. The figures presented were global figures as they related to affected enterprises. He requested that the TBCSA sends the PC a report on the categories of owners of enterprises, such as women, youth, and black people, and that the figures presented show the extent to which COVID-19 has particularly and specifically affected people in those categories. He also suggested indicating a category on entrepreneurs in the tourism sector and related sectors who are based in villages, townships and small dorpies (VTSDs), so that when there is discussion about how COVID-19 has affected South Africa’s tourism industry, “we must be able to dig deeper.” If that is not done, then government and the private sector may find that when they plan for recovery, the VTSDs will fall into the cracks, and things will go back to the status quo of the big players in the industry moving ahead of everybody else, and “it will take us another 50 to 100 years to overcome that particular problem of the villages, townships and small towns who have been affected by the devastating impact of COVID-19.”
It did not look like there was a category in the report of a collective of new entrants. Only one was mentioned. There needs to be a category of new entrants in the tourism sector -- those who have been in the industry for two years, and even those who have been in the industry for a month, prior to COVID-19. That category is needed to indicate how to help new entrants not to be dissipated completely.
He agreed with the proposal that advocates the use technology that allows testing people in advance, and making sure that people who are positive are isolated and can be attended to, but those who are clear can then attend events. The magnitude of the event would not matter, because it would be a congregation of people who had tested negative. People could do the other basics, such as washing their hands, sanitisation, etc. It will be a congregation of people who are COVID-19-negative, because technology would have tested if they are negative or positive. One would then create a win-win situation for the industry. He suggested that the PC and TBCSA both work on that proposal, so the PC could approach the part of the Executive that is responsible for dealing with COVID-19, and make it known to South Africa that this is the collective view of the PC and TBCSA -- that both parties think that things must move faster, especially if there is a guarantee based on test results that people who will be congregating have tested negative.
If people go to stadiums, for instance, to see rugby, cricket, and soccer games, then a system may have to be introduced where one is obliged to buy tickets from Computicket, or another online platform, well in advance. Secondly, one would have to demonstrate that one has tested negative, so that when one arrives at the stadium, there is some kind of indication that one has indeed tested negative and bought one’s ticket well in advance through one of the various platforms. Then there would not be people who do not have tickets arriving in huge numbers at the stadiums, who may not have been tested, etc. Those are proposals that must be factored in as far as trying to get the tourism sector started again.
He also thought that the PC must approach the Executive around government events, meetings, workshops, seminars etc. Social media platforms must be used. However, the PC should also suggest to the government that for all Executive meetings, for example, they must approach particular categories of participants in the tourism sector who have suffered, so that those meetings and workshops can begin to take place in those venues. If someone runs a B&B, or a lodge, and almost every week, there is a government activity that comes to the B&B, lodge, small hotel, etc., and those government people are tested, then at least those people would be able to start recovering. People can at least start retaining and maintaining jobs, and in turn people would be able to maintain their families. The long queues at the Post Office can then be reduced, because people will have income. The PC should lobby and make a proposal to government to say that it must start holding meetings where people have been vastly affected by COVID-19. One can imagine that if municipalities, national departments, portfolio committees, and the entire Parliament, went out and used people’s guesthouses and other establishments, it will make an immediate contribution. What one needs there is just a decision on when to start this.
The PC must also suggest to government that “we are in a new situation.” Government and the private sector, over and above other proposals they have come up with, must come up with a unique package targeted at the tourism sector. It must be a package that seeks to rescue the tourism sector. For instance, instead of people struggling to apply for this or that, government must be able to say that it assesses people’s situations and based on that situation -- and itself working with the private sector -- here is a grant. Currently, the situation is that people must be able to apply. However, it is cumbersome. Sometimes, one needs money just to make these applications. Some people cannot access the internet. Some people cannot access the forms that are being spoken about.
People who are not part of the formal tourism sector need reassurance. Since such people are not organised, their voices are not heard. They survive by going to the taxi rank every morning to sell amagwinya, pap and vleis. These people are not organised. Making their voices heard also needs to be considered, listened to and responded to, because the Restaurant Association is for those who are formally established, those who are licensed. Those are the people who have a voice that can be listened to by the rest of the private sector and the Government.
Tourism sector responses
Mr Komani said that when he said that the meeting is like a “family meeting,” he meant that. Every time the TBCSA presents to the PC, it gets a good feeling that it has allies in its fight to recover the industry. When it is meeting with the PC, it “feels at home”, and has that sense of belonging. This is a safe environment for the TBCSA to express its views, and to know that it is talking to a receptive audience. He thanked the Committee Members for that.
He said that with the bulk of the questions, the TBCSA needs to come back to the PC in writing. The PC had made several proposals, and several recommendations. The TBCSA team needs to sit down and come back to the PC in writing. He asked team members to respond to Ms Gomba’s question on how the TBCSA sees Sefa impacting on the tourism industry. The TBCSA welcomed the proposal by Mr Gumbi, and supported by Mr Moteka. This industry needs help. The biggest help that the industry needs is to be given guidelines to trade.
Continuous government bailouts and support are not sustainable. This talks to the question that Mr De Freitas raised on what the biggest impact has been -- the regulations, or the virus itself? This industry is capable of trading, but it just needs guidelines to say, “trade within these parameters.” Closing the industry completely is not going to save it. It is known that South Africa’s fiscus is not that deep, and it is known that this industry is capable of complying in terms of its protocols. If Members ask what the industry needs, “we need rules.” Tell it what it can do, and it will comply, and it will make sure that those that are not complying do comply. Fortunately, a lot of members are operating on licences. The Executive must take away the licence of those who are non-compliant. Everyone must not be painted with the same brush. There will be people who are not complying, but in the main, entities will comply.
The TBCSA excluded the issue of transformation for this meeting. It will be one of the unintended casualties of the pandemic at two levels. The first level is on retrenchments. The second level is on the SMMEs. SMMEs and big businesses are interrelated. When big businesses cannot trade, they will not source their goods from SMMEs, because businesses are not trading.
The Association would come back to the PC on the figures requested. There was the burning of the Bongani Mountain Lodge in Mpumalanga. Such things do not help. One builds something that can provide for that community, and it gets burned down. Those are things that the TBCSA needs to address as it deliberates its future forward.
Mr Tshivhengwa responded to Ms Gomba’s question. He said that the Tourism Equity Fund is welcomed by the TBCSA, as it will go a long way in assisting those who want to make acquisitions within the tourism space. It is important to note that the grant component of the TEF is up to R20 million per single applicant. Government is putting R180 million per year for the next three years into the grant part of the TEF. The rest of the money comes through Sefa, where the normal applications for loans still apply. The only difference here is that the fund is targeted at transformation, and the companies have to be 51% black owned. When one makes the application, it is not a matter of things being automatic -- there has to be a business case, it still has to be viable, and it still has to be something that is bankable in terms of the return on investment from the loan point of view. These loans are still repayable, although Sefa may grant some payment holidays.
When talking about the grant component of this, R180 million is not a lot of money in an industry, that is worth roughly R400 billion. As much as the TBCSA welcomes this, and it will encourage a lot of SMMEs to come on board and be able to use this funding, it is still important to note that the minimum application has to be R10 million. There are lots of SMMEs that are below R10 million in their turnover, and that will require less than R10 million for an application. As the TBCSA looks at the uptake of this fund, it will be important to say, “Are we getting a lot of people applying for R10 million plus? Or do the majority of people want less than R10 million?” That needs to be looked at, so that the TBCSA is agile in its ability to assist SMMEs from that point of view.
The TEF is a welcome intervention, and the TBCSA hopes that it continues, and hopes that people come on board. But the most important thing is that anyone who is to receive that money has to be coming into an industry that is operational, so that such people can be able to realise their dreams and goals. For every entrepreneur that applies, what is important for them is to make sure that they can practice what they want to practice, and make an income. If South Africa does not have a thriving industry, it will be coming back to square one a few years down the line to say that the money was there, people qualified, people applied, but the industry is not operational. The industry needs to be protected from the demand side to ensure that the supply side is also protected with the inflow of the demand side.
At the beginning of the pandemic, there was R200 million in grant funding that was geared to SMMEs, where each SMME received about R50 000 for those that qualified. Although there were many that qualified, the fund was not enough to cover everyone. That also helped -- there are many people who received money from that fund who are still afloat. The biggest thing that has to be worked on is the government loan guarantee scheme. When the President spoke at the SoNA, he spoke of about R18.5 billion being committed. It means that there is more money sitting there that the industry cannot access, especially the SMMEs. This has been seen from the tourism side of things, when the TBCSA was discussing these issues at NEDLAC with the Banking Association of South Africa (BASA), as well as Treasury, and advocating that the social partners want this fund to be reviewed so that it can have the impact that it is designed to have. If the government loan guarantee scheme is not designed in a way that favours tourism businesses, and looks at tourism businesses differently to other sectors, then the industry will continue to have problems. He supported perhaps having a separate fund that is geared at tourism businesses and was big enough so that there could be different rules that look at the tourism industry differently, and supports small, medium, independently owned and listed businesses. That is something that the TBCSA raised through NEDLAC, and it is something that it will continue to raise through NEDLAC and other places.
Mr De Kock said that SAACI can share a proposal that has been written, as well as a 90-second video that it made in December, that indicates how the rapid test has worked. There is a live site at the Lookout on the V&A Waterfront for any Members who are keen to see how the system actually works in testing people for events and conferences. He would share that through the TBCSA CEO, and conversations could be had with the Committee to see how best the TBCSA can do this together with government.
The Chairperson said the PC may have to arrange a day to go to the V&A to experience the rapid testing site itself, so it could to talk about something that it can vouch for. The PC will work on a date alongside the Secretariat, and then it can communicate with its colleagues at the TBCSA. The PC could perhaps invite Members from other Committees, so that there are a number of people who are convinced about the practicalities and possibilities of this and can help the PC to push for a different approach.
Mr H April (ANC) agreed with what the Chairperson said. The PC is practical -- it does not want to just see things on paper.
Mr Tshivhengwa said the point had been raised on how informal businesses are important to tourism, and how their voice is not collective, and they were not being heard. The TBCSA has noted that, especially in the restaurant space. It has not started quantifying how many formal and informal operators there are, or in which districts those who are trading with those businesses are situated. It is something that the TBCSA is prioritising, and it will do a survey with the Restaurant Association in South Africa to make sure that everyone involved in that aspect of hospitality is accounted for. It will find out which districts people are in, and be able to understand their problems on the ground.
There has been conversation within the hospitality sector, and the association represented in the TBCSA, the Federated Hospitality Association of South Africa (FEDHASA), has been working on trying to quantify how large the industry is, and how many people work in the industry. This relates to the question of how many South Africans and how many foreigners work in the industry. It is important to note that in the formal economy, the majority of people are South Africans. In other sub-sectors, there are a lot of people who are coming from neighbouring countries. It needs to be ascertained whether people are working legally or illegally. The TBCSA has to be very deliberate when it looks at that, to make sure that it is not marginalising people who are here working legally, but happen to be from another country. There are many South Africans who do the same outside of South Africa. It is something it is working on to make sure that that situation is harmonised, so that there is a full understanding of who is working here, who is supposed to be working, and who is not supposed to be working. From the restaurant sector, that is something that is being worked on going forward.
Mr Tshivhengwa spoke about licensing, rates and taxes, and any other payments that the industry is making while it was not operational. The TBCSA welcomed those issues being raised. Hopefully the industry would get relief from that point of view, and the TBCSA is able to lessen the burden of cost on the businesses and the employees. The TBCSA comes to the PC with hope, as it carries the concerns, burdens and fears of the masses of employees within the tourism sector, and businesses within the tourism sector. If one looks at the SMMEs who have just entered, some of them entered five years ago, some of them have been trying to come on board, and some of them are still informal, but they are there doing tourism, encouraging travel from rural areas, and getting people in their own vehicles to see the country at large. The TBCSA carries their voices, and their wishes. All such people want to do is to operate, and they need a regulatory environment that is conducive for them, instead of operating today, and stopping tomorrow. Operators cannot take that shock in terms of their finances.
He believed that the majority of operators are very appreciative of the work that has been done, and that to keep the industry open, there was a need to continue to make sure that there is certainty within the industry, and there would be a lot more SMMEs that started operating coming back and operating. The industry will start to see the convergence from SMMEs working with bigger companies, and making sure that there is a flow of business from those that can get business to those that can be hired to provide specific items of that part of the business. For that to happen, the industry needs to be operational. If it is not operational, and is still under a lot of restrictions, then it will see a whole lot of entrepreneurs not being able to operate.
Mr Komani thanked the Committee and the Chairperson, and said that the TBCSA appreciated the opportunity to share experiences, the pain, and everything that the industry has experienced in the last 11 months or so since the pandemic started. He had confidence that this is a Committee of action. Actionable points had already been identified, such as the resolutions that Mr Gumbi suggested, the suggestion by the Chairperson that the PC should go to the V&A Waterfront site and see things live. The TBCSA would come back to the Committee with comprehensive written input, including the issues that it thinks the Committee needs to help the TBCSA act on as quickly as possible, such as the Lions Tour.
Mr Tollman thanked the Committee Members for their support. It meant a lot to everybody to have the Members’ support, and to know that the Committee is behind the TBCSA members.
The Chairperson thanked the TBCSA members once more for agreeing to come at short notice, and for being prepared as it always is when coming to the Committee. He said that the PC has never experienced problems with the TBCSA since the two started working together, and does not envisage any problems in future. The PC will support all efforts aimed at making sure that South Africa does not just resuscitate the tourism sector, but also the whole economy, so that there is the possibility for the creation of jobs, alleviation of poverty, and dealing with all the challenges that South Africa is facing. If South Africa got into a worse situation than it is in now, where would the country be? That situation must not be thought about.
The PC wanted to thank the TBCSA for holding the fort, and making sure that its members are engaged, making sure that it understands their problems, and for those that it can help resolve problems, it does that. For those whose problems it cannot solve, it keeps up the hope, it keeps up the moral support. Nobody must give up. For those people whose businesses have shut down, it was still the Chairperson’s view that they must be approached as a category by both the Government and the private sector, to see how such businesses can be rescued on a case-by-case basis, so that they can go back into business, and perhaps grow bigger than they were before COVID-19.
He thanked the TBCSA for its participation and enriching engagement. The PC would come back to the TBCSA on the proposals that had been made, and it would engage Treasury, the Department of Cooperative Governance and Traditional Affairs (CoGTA), the Department of Small Business Development, the Department of Transport (around issues of regulation), and the Department of Employment and Labour and other relevant departments.
Analysis of SoNA
Dr Sibusiso Khuzwayo, Committee Content Advisor, said that the presentation was compiled by Ms Sisanda Loni, the Committee’s Researcher. On the support staff’s side, they did not think that there was a need to redo the presentation. The observations that the support staff wanted the Committee to take note of had been emphasised by the interaction that the Committee had with the TBCSA. On the support staff’s side, it was mainly the reflections from the Committee on the issues and suggested actions that the support staff had raised. For example, it observed that TERS was extended until 15 March 2021, but looking at how seriously the industry was impacted, the proposal was that the Committee can give an addition to the resolutions that have been proposed in the meeting today, to say that even with TERS, there needs to be a serious intervention on further extensions of TERS. If one looks at the number of jobs that are lost, according to the presentation just heard, it is clear that the sector is still going to lose a lot of jobs, and something drastic needs to be done.
The support staff requested that if the Committee makes firm decisions from the proposals that the Secretariat made, then it needs to be taken further. Such decisions could be packaged in the form of a communication from the Office of the House Chairperson to the relevant structures, be it internally, where the Committee engages with other committees in the implementation of the joint committee meetings that are on the cards for the Committee, or be it external communication, where there needs to be communication from the Office of the House Chairperson that will go to the Minister of Tourism, for example, or to the Minister of Finance, etc. when it comes to taxes and levies at a municipal level. From the support staff’s side, it would then package those letters or communications accordingly for further forwarding through the Office of the House Chairperson. What the support staff also requested from the Committee is firm action in taking these things forward.
Mr Gumbi mentioned a proposal for resolutions from the Committee, which it could adopt. It contains some key principles. He had put together draft resolutions on the tourism industry, which could be shared and even considered for the next meeting. He would be happy if the Chairperson could table that.
The Chairperson said that based on the Committee’s discussions, the team would work on that resolution, and compile those proposals and an action plan on the proposals. The Committee would then circulate those documents among the Members.
Ms Winkler asked if the Chairperson was looking for feedback on the UIF and TERS, or was the Committee now discussing what the President had said at SoNA that applies to tourism?
The Chairperson said that that was what the Committee was dealing with.
Ms Winkler said the President touched on the Presidential Climate Change Coordinating Committee. She said that tourism will be heavily impacted by predicted extreme weather events. The President did speak about mitigation, resilience and adaptation. The PC needs to be forward-thinking and look at adopting a strategy or a plan to mitigate against the worst impacts of climate change, especially on coastal tourism communities, and inland where severe drought is projected. The PC should look at ways to adapt the industry, and encourage operators to submit plans so that the worst impacts can be offset. It is going to have a devastating impact on the economy and biodiversity.
Ms Gomba said that the President spoke about improvement of job creation. Through the tourism sector, there is a need to work on the issue of employment of people from South Africa being given first preference, especially if people have experience in the work. This would not be removing other nationalities, but considering them after considering South Africans. “Right now, we find that the tourism or hospitality business is mostly dominated by people who we say are our friends from other countries, but they occupy more jobs than South African people who are not employed who can do the work.” It is something that the PC needs to look at. The government is trying very hard to ensure that it gives support to these businesses so that they can create jobs for the people of this country, to reduce crime, poverty and inequality.
The Chairperson said that perhaps the PC should state something in a policy about having not less than 80% of the workforce being South African, or something similar. After looking at the rest of the policies on the Department of Employment and Labour’s side, it can work on a concrete proposal around a threshold of South African categories of employees broadly in the tourism sector.
Ms Makhubela-Mashele said that the analysis of SoNA presented to the PC was to elevate issues that were raised that concerned the tourism sector, and cross-cutting issues -- for example, the ease of travel, which rests with the Department of Home Affairs and the Department of Transport -- and also to make bold policy proposals for the year under review. She would have thought that the PC’s role was to take all the points raised, and put them into programmes of action so that it does oversight, and see how far things were regarding the issues that were raised, and not to be bringing new proposals and resolutions to the Committee for adoption. Instead, it would ensure that the PC monitors, in playing its oversight role, and also picks up points raised from the SoNA, to say that the President mentioned this, and to ask how far the Department has gone about this. Where there are cross-cutting issues that rest on other departments -- for example, the rolling out of the visas for the other countries that were not on the pilot programme, where it would be important to get reports from Home Affairs on what its concrete plans are to ensure that the rollout of the electronic visa is actually implemented.
The Chairperson said what the PC, Dr Khuzwayo and Mr Jerry Boltina, the Committee Secretary, need to do is to say what is actionable in line with the PC’s mandate to do oversight, and not only on the SoNA. The PC has always sent the Department its resolutions, its decisions, etc. The PC will have to say, from this year’s SoNA, what is actionable, and ask where these things must be located. Must some of these things be located in the departmental quarterly performance programme, or the annual performance programme, and which ones will be located in South African Tourism? It will also have to ask whether some of the issues that it raised in the past as a Committee are not catered for in the State of the Province addresses. How does the Committee make sure that the Minister, when she does the budget, that its resolutions and decisions are going to be there, so that there was some kind of an appreciation from the PC’s side that it had raised these matters, and that they are factored into the departmental programme of action and the budget. Those resolutions that the PC think of as part of the action plan, need to be processed through the House. Let the PC look at the rules, and if the plans fit, let the PC agree that before they go through, they will go to the PC. Let it action the plans through Parliament as part of complying with the rules. He suggested categorising these issues, and sending them to Members. All Members must be happy that everything is covered, and then it will move forward.
Ms Gomba agreed with the Chairperson, and was supported by another Member.
The Chairperson said that this will be circulated as soon as possible to all the Members, including whatever they suggest on categorisation, actionalisation, and who is responsible for what. The PC had identified 18 departments which would need to work together to make tourism work.
Consideration of draft minutes
The Committee considered draft minutes from its previous meetings – 24 November 2020, 2 February 2021 and16 February 2021.
The Chairperson said that he will write to the Members to look for a suitable date for the PC to go to the V&A Waterfront to experience the instant COVID-19 testing technology. On that particular day, a large contingent of the media should be there so that South Africans can appreciate the extent to which COVID-19 has meant that the industry has had to innovate to be able to deal with the problems facing the nation. When the date is finalised, it will be sent to the Members.
He thanked everybody for their active participation, and for their engagement. It was a very productive meeting, and the Members had learned a lot. The PC had seen the extent to which, in figures, COVID-19 has affected the tourism sector. He also suggested that as part of oversight, with these businesses that have closed down as a consequence of COVID-19, the PC may have to identify some of them. The PC must look at provinces and say which province have how many businesses that closed, and then decide how it can go and visit them and speak to the owners, so that it can also see for itself and hear for itself how COVID-19 has ravaged and affected negatively some of the businesses in the tourism sector.
The meeting was adjourned.
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