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Tourism businesses must keep the sector ticking over

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Businesses who are contending with changing environments and economic pressure following the Covid-19 lockdown should focus on their immediate challenge: remaining a going concern until demand returns.

This is especially true of businesses in the tourism industry, states Arthur Kamp, chief economist at Sanlam Investments.

In the recently-released State of Cape Town Central City Report, he says despite borders now being open, a return to pre-pandemic activity levels for the city’s tourism industry, especially foreign tourist arrivals, “seems a way off”.

Still, as its major international competitors have also been affected by travel restrictions, Cape Town maintains its competitive advantage.

“Once Covid-19 passes, pent-up demand should unleash a wave of foreign visitors. But, until travellers return, establishments will need to tap into new demand segments and consider reorienting their marketing strategies and product offering to the local market, including the potential for regional tourism.”

The lifting of the national travel ban and the resumption of limited flights have enabled hotels in the Cape Town Central City to re-open to cater to the needs of business and leisure travellers, says Wayne Troughton, chief executive at HTI Consulting.

Some brands have adopted a phased approach to accepting guests, electing to open only a few properties at a time until demand increases. “Although the re-opening of hotels is a positive step when the market as a whole might start to recover remains the burning question,” he says in the report.

“Cape Town has always been a resilient destination. Its ability to ‘bounce back’ has increased as the reputation of the city has grown globally.” Despite the city’s resilience though, the global pandemic is unprecedented and hotel data intelligence company STR estimates that European markets are likely to return to levels achieved in 2019 by the end of 2022/2023. South Africa is expected to follow a similar trend.

 

“As in other global destinations, domestic markets will be the first to recover as it will take time for international travel to regain momentum. Capturing such demand will require a strategic approach…”

Globally and domestically, accommodation providers a number of techniques to assist them in navigating the devastation caused by the coronavirus.

Troughton says hospitality providers must:

* Clearly indicate to customers the protocols in place to ensure their safety during their stay – these should be easily visible on the website/booking platform

* Adjust budgets to include the additional costs related to maintaining the hygiene standards that will be expected and determine how this will impact the bottom line

*Identify which customers are likely to return first (corporate business travellers, government, leisure travellers) and target them with deals and packages.

* Manage guest expectations – the traditional complimentary fruit bowl/bottle of wine that guests are used to are unlikely to be continued under new hygiene and safety protocols.

* Open gradually (just a few rooms at a time) and in line with the demand in order to ensure costs are managed Hospitality providers should also consider ‘Staycations’ or mini-breaks targeting Cape Town and broader Western Cape residents.

“Be creative. Some hospitality providers are selling credits for rooms (at discounted prices) with the client able to confirm a booking at a later stage – pay now book later. This is assisting in managing cash flow.”

He advises providers to be competitive in terms of price but manage discounts carefully as rates are difficult to “clawback” to previous highs once demand starts to return.

“The recovery from Covid-19 will be a marathon, not a sprint. The virus will be with us for some time, at least until a vaccine is developed. Adapting to the new normal and finding the right balance between saving lives and economic prosperity will be key to long-term sustainability,” Troughton says.

The State of Cape Town Central City Report notes that there are 169 tourism-related businesses in the central city.

These include:

*Airlines 4

*Backpackers 27

*Car hires 13

*Embassies 22

*Hotels (incl. res) 44

*Student hostels 5

*Travel services 54

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