Government has changed regulations banning accommodation for leisure travel, leaving the tourism industry facing a bleak outlook, with the severe risk of massive job losses.
The new regulations promulgated by the Ministry of Cooperative Governance and Traditional Affairs (COGTA) following President Cyril Ramaphosa’s address to the nation on Sunday evening, July 12 now excludes hotels, lodges, bed and breakfasts, timeshare facilities and resorts and guest houses from operating for leisure purposes.
Many within the Tourism industry are at their wits end, with the prospect of some 1.5-million individuals facing business closure and job losses. Tourism Business Counsel of South Africa (TBCSA) CEO Tshifhiwa Tshivhengwa has questioned the logic of the latest raft of measures announced as infection rates soar across the country.
He took to twitter stating, "This certainly defies logic. You can get on a local taxi with 100% capacity but you can’t stay in a hotel alone or with your family. Where is logic and consistency here? Other industries are allowed to work with less protocols. We will meet there. Enough."
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The TBCSA will be looking to take further "legal action", in light of the announced changes, as they together with the South African Tourism Services Association (SATSA) lobby for the re-opening of tourism in South Africa.
And while the indication from Tourism Minister, Mmamoloko Kubayi-Ngubane is that SA's tourism economy is unlikely to resume fully within the next 12 to 24 months, global surveys have provided some direction on how accommodation providers can adapt themselves.
In mid-June it was understood that leisure travel accommodation had been opened up, when the President announced that "accredited and licensed accommodation" would be allowed to open. An exception, however was then already placed on home-sharing accommodation like Airbnb. As a result, many Airbnb hosts are already looking to rent out their units for a longer period of time instead of allowing it to stand vacant, with a knock on effect, with experts suggesting a drop in rental averages for tenants, as increased supply pulls prices down.
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But serviced apartment stays will have more than just an impact on rental rates going forward.
Insights from biweekly consumer surveys held in multiple countries by global professional services firm Deloitte, published earlier this month, show that health and safety concerns, although gradually lessening, still overshadow discretionary travel.
“Concerns about health has obvious implications for consumer-oriented businesses,” says Leon Pieters, Deloitte Global’s Consumer Industry leader. “Clearly, people must feel safe from the virus before they visit a shop or board an airplane.”
The pandemic is having a distinct impact on consumer spending—with potentially major consequences for those economies driven by consumption,” points out Pieters. “As isolation measures start to relax, purchasing trends for discretionary items should be a good indicator of pent-up demand and a signal of whether consumers are ready to spend again.”
James Woolley, co-owner and director of Totalstay says, “The aparthotel industry, is well positioned to mitigate the health and safety risks of travel because of its sheer nature.” As part of SA’s aparthotel and luxury-villa industry, Totalstay is home to a collection of one-, two- and three-bedroom apartments and villas in Sea Point, the Cape Town CBD and Woodstock.
A more self-sufficient way of traveling
“Apartments offer a more self-sufficient way of traveling, with fewer public spaces and greater means of upholding social distancing,” says Woolley. Fully equipped kitchens allow guests to prepare their own food, limiting contact with others.
“Aside from guests being more separate in how they live, sanitation is better in serviced apartments: you’re able to wash your own clothes, linen or kitchenware, minimising contact with the outside world, and make use of complimentary hand sanitisers in each apartment.”
The Deloitte survey did show sentiment towards travel slightly improved, with three in ten (31%) of those surveyed feeling safe staying in a hotel, up from 25% a month earlier. Similarly, a greater number of people felt safe to fly: 26% in mid-May compared to 22% in mid-April. Yet Deloitte believes that the overriding concern is personal safety, with implications not just for the tourism industries, but a number of other consumer-oriented businesses.
Hygiene and cleanliness top the list of what accommodation providers should address to allay traveller fear.
“Some of our distribution partners, including Airbnb, are setting a precedent with easily implementable protocols,” says Woolley. In April, Airbnb engaged former US Surgeon General Dr Vivek Murthy to help develop an enhanced cleaning protocol for its hosts, which includes an easy to follow cleaning handbook.
“Without question, local accommodation providers will need to enforce highly visible, practical protocols, and find ways of reducing public area footfall which leads to greater risk.”
'Globally, serviced-apartment sector has weathered the storm'
Given that traditional accommodation providers, like hotels, cater for shorter stays, offer more amenities and need a greater amount of staff, this collectively increases the amount of people a guest would come into contact with. The opposite is true for an aparthotel.
Although not immune to the impact of Covid-19, global property group Savills says the serviced-apartment sector has weathered the storm marginally better than hotels. Savills’ Marie Hickey, director of commercial research, and commercial research analyst Joshua Arnold, highlight data from STR, a global data and analytics company for the tourism industry, which reveals that the United Kingdom’s serviced-apartment sector was trading marginally above that of hotels during April and May. And proportionally fewer serviced apartment properties have had to close compared to hotels.
Hickey and Arnold say that the business traveller’s typical longer-length stays have upheld a level of resilience for the industry, especially in major hubs like London. In the first quarter of this year, occupancy of London’s serviced apartments stood at 61.8%, down 21.5% on the same period in 2019. Comparatively, hotels reported a larger decline, of 23%, over the same period, with average occupancy at 59.4%.
The Savills researchers believe that typically lower operating costs, coupled with longer average length of stays, upholds greater profitability of serviced apartments compared to full-service hotels.
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