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South Africa tourist slump sees growing retrenchments

A slump in tourism and conferences is hitting the hotel and events industry hard, particularly in Cape Town and Durban.

South Africa tourist slump sees growing retrenchments

A slump in tourism and conferences is hitting the hotel and events industry hard, particularly in Cape Town and Durban.

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“Even though it’s school holidays, revenues are down at hotels and guest houses as more families stay at home. Conferences and seminars are also dramatically down and seeing slow bookings or none at all, putting some conference venues and training companies at risk,” said Andre Snyman, CEO of debt counseling organization, Consumer Assist.

“Our Cape Town office is seeing increasing numbers of applications from people who work in the hotel, guest house, wine farm, conference and fishing industries that have lost work or are on short weeks. We already have significant numbers of people we are helping from the textile industry who are on short weeks but we are seeing sudden spikes in applications from the tourism industry, which is worrying because it has become a bed-rock of the Western Cape and KwaZulu Natal job creation sector and a major income earner for South Africa.”

Tourism to South Africa has grown sharply in recent years and airfares to southern Africa from Europe are now among the most competitive in the world.

“A dip in tourism now is an important challenge,” Snyman said. “There have been recent warnings from tourism industry experts that prices at many South African hotels and restaurants are too high and have not taken into account the global economic downturn. It seems many are holding prices artificially high hoping for a 2010 Soccer World Cup bonanza. Luxury villas at Llandudno, as an example, that normally go for R8 000 a night during December are demanding R75 000 and perhaps not surprisingly have seen no takers yet.”

Snyman suggested that some establishments while looking at hoped-for foreign revenue had outpriced themselves for the domestic tourism market and forgotten that tourism from other African countries dramatically outpaced visitors from Europe, Asia and the Americas. “If you go on to almost any hotel or conference venue website at the moment they are offering specials through to the end of July to try and push occupancy up.

“There seems to be a trend too that conferences and even training are being considered luxuries. There is a demand now for one-day conferences so companies don’t incur accommodation costs.”

Sol Kerzner’s much trumpeted new mega five-star hotel at the Waterfront has already laid off 50 staff and Asara wine farm laid off just over two dozen staff, said a statement from Consumer Assist yesterday.

“But 20 new hotels are nearing completion in time for the 2010 World Cup and an insistence from Fifa that there is not enough accommodation in South Africa and much of what is available is too expensive.”

Hotel Missoni in Cape Town, part of the Rezidor group, is completing a R340m property targeting celebrities and film stars. It is expected to create 200 permanent jobs when doors open just in time for 2010 soccer. The new Hyde Park Southern Sun is due to open its doors next month.

Although hotels claim that occupancy rates for five-star hotels in Cape Town are in the region of 70 percent, occupancies were down about 15 percent for the first four months of this year, compared with the same period last year, said Rezidor’s vice president for business development (Africa) Andrew McLachlan.

Tata, the Indian motor and hotel group, is opening a R500m five-star hotel in Cape Town, the Taj Palace Hotel, and aims to employ 300 staff.

Snyman said: “Our feedback from staff in the hotel and tourism industry is that all rates are up for negotiation, especially with corporate clients who can get hotel rooms up to 50% or 60% less than quoted rates. Even though new hotels are opening, the tourism slow-down suggests that until the World Cup, and perhaps after, the hotel market might be overtraded, especially as the global economic environment seems unlikely to recover before 2012.”

A recent global travel survey conducted by research institute IPK, based on 500 000 travel interviews in 58 countries, suggested that: “Long-haul travel is falling sharply. And the most pain is felt in the business travel sector. We are in a full global economic crisis, not a small recession. Consumer greed of the last few years has turned into consumer fear.