Tourism Industry Survey of South Africa: COVID-19 Preparedness for Reopening JULY 2020: SURVEY 2 Foreword This survey, which is a collaboration between IFC, Department of Tourism, and TBCSA and all its member associations, is the second of three and assists all the relevant tourism stakeholders to gauge the depth of the crisis in the tourism sector of our country. The results of the surveys provide important additional data to the collaborative work that is currently underway between government and the private sector towards reopening the tourism sector in the context of the risk-adjusted approach adopted by our government. Every bit of information is vital for us in our attempt to manage the delicate balance between protecting livelihoods and the economy on the one hand, and protecting people’s health on the other. Leaders and economists across the globe have largely admitted that the COVID-19 crisis will leave the global economy in a state not seen since the Great Depression of 1929. Undoubtedly, the tourism sector, internationally and locally, has been the biggest casualty of the current crisis. We are still uncertain about the full impact of the Coronavirus on the tourism sector, but also, more worringly, about how long the crisis will take to go away, if at all. The United Nations Conference on Trade and Development (UNCTAD) has listed our country as one of the top 15 countries that is being negatively impacted by the near-closure of the international travel industry during the pandemic. The survey results are indeed an indication that the COVID-19 crisis has already significantly devastated the supply side of the tourism sector as a result of the demand collapse in our country. It is too early to proclaim that the worst is over because much is still unknown. Even in parts of the world where it seemed they had brought the pandemic under control, uncertainty still lingers. Our task, however, government and business, is to continue to closely work together to prepare for recovery of the sector. This too shall pass! I would like to thank the 1501 respondents who, in the midst of the worst crisis, took time to complete the survey. Let me also thank Tourism Department officials, TBCSA and IFC on this collaborative effort in administering this survey. Mmamoloko Kubayi-Ngubane, MP Minister of Tourism 2 Highlights • 99% of responding enterprises are affected by COVID-19. • Business are marginally more optimistic now in June than in April, with 67% feeling neutral or positively believing their business will survive to take part in the recovery, up from 64% in April. • 61% of enterprises are not currently operating, with 54% planning to reopen by September. Most of these reopenings will be partial. • The most significant concern for businesses considering reopening is sufficient demand to break-even, and 66% of enterprises highlight the requirement for international and domestic markets to open before they will consider reopening. • 95% of enterprises (83% in March) report that revenues in May 2020 are down more than 50% compared to May 2019, and 75% of enterprises say revenues are 100% less. This is significantly more than in the previous survey, where 34% of enterprises said revenues were 100% less. • 64% of enterprises were unable to service their debts and 67% of enterprises were unable to cover fixed costs in May 2020. • The most common mitigation measure regarding workforce management remains wage reduction – as it was during the last survey, and it has increased to include 55% of enterprises with more than half their workforce on reduced wages (up from 50% in March). The number of enterprises employing furlough measures has stayed constant, as have the numbers of enterprises making redundancies. 43% of enterprises say they have not made any redundancies. • Medium-sized enterprises are the most affected in terms of wage reduction (89% have reduced wages for more than half their workforce) and furlough, followed by large businesses, and large businesses are most likely to have made more than half their staff redundant (16%). • The most commonly applied mitigation measures by businesses are supporting deferment of bookings instead of cancellation, and providing refunds. • In a similar pattern to the results from the April survey, all businesses prioritized the need for financial support for cashflow, financial support for recovery, and tax relief. In this survey, expert advice on business recovery, advice on health and safety measures, and support for commercial debt repayment have climbed higher on the priority list. • As before, micro enterprises claim cashflow is their first priority, small enterprises prioritize financial support for recovery, and both medium and large enterprises prioritized tax relief. • The support facilities with the most respondent awareness are the UIF scheme and the Tourism Relief Fund of the Department of Tourism. There has been strong uptake for all facilities, and success rates and public perception has improved dramatically since the previous April survey. 3 June Respondent Profile Summary • 1501 total respondents. • 99% are affected by COVID-19. Of those affected: • 65% are micro with 1 - 10 employees. • 53% have an annual turnover of R0 - 3m. • 59% are accommodation providers, 16% are tour operators, and 9% are activity or experience providers. • 60% of enterprises are 10 years or older. April Respondent Profile Summary • 1610 total respondents. • 99% are affected by COVID-19. Of those affected: • 66% are micro with 1 - 10 employees. • 52% have annual turnover of R0 - 3m. • 46% are accommodation providers, 20% are tour operators, and the rest split between activity providers, Meetings, Incentives, Conventions and Exhibitions (MICE), conservancy- related, community-based, transport and other. • 62% of enterprises are 10 years or older. 4 Results Overview Before COVID-19, in February 2020, the performance and optimism around the South African tourism economy was relatively positive. 43% of responding enterprises claim they were growing, with a further 30% performing at a constant level. Most enterprises felt either neutral or positive about the future of their business and tourism in South Africa. After three months of feeling the impact of COVID-19, 99% of enterprises claim to be affected by the pandemic. 29% feel neutral or optimistic about the future, compared to 23% in the April survey. BEFORE COVID-19 Sentiment pre-COVID (recollected now in June and before in the April survey) are similar - recording 82% feeling neutral or optimistic about their business and the future of tourism in SA (June) compared to 79% (April). 8% 9% 15% 18% 49% Not at all Very much 30% 43% 27% Growing In decline Stagnant NOW IN JUNE 2020 29% feel neutral or optimistic about their business and the future of tourism in SA, up from 23% in April. 42% 29% 19% 6% 4% Not at all Very optimistic 67% feel neutral or positively believe their business will survive to take part in the recovery, up from 64% in April. 7% 27% 38% 18% 14% Not at all Very optimistic 5 Business impact of COVID-19 REVENUE FORWARD BOOKINGS 95% of enterprises (83% in March) report revenues in 78% of enterprises (81% in March) report forward May 2020 are down more than 50% compared to May bookings held in May 2020 are at least 50% less than 2019, and 75% of enterprises say revenues are 100% bookings held in May 2019, and 34% hold 100% fewer less. This is significantly more than in the previous survey, bookings compared to 36% in the previous survey. where 34% of enterprises said revenues were 100% less. March 2020 May 2020 March 2020 May 2020 34% 36% Down 100% Down 100% 75% 34% 83% 81% Down 50% Down 50% or more or more 95% 78% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Responding enterprises Responding enterprises OCCUPANCY/CUSTOMER USE 94% of enterprises (85% in March) say occupancy or patronage in May 2020 is down more than 50% compared to May 2019, and 75% say occupancies are 100% less. This is significantly more than in the previous survey, where 47% of enterprises said occupancies were 100% less. March 2020 May 2020 47% Down 100% 75% 85% Down 50% or more 94% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Responding enterprises 6 DEBT SERVICE FIXED COSTS 64% of enterprises were unable to service their debts in 67% of enterprises were unable to cover fixed costs in May 2020, compared to 58% in April. May 2020, compared to 54% in March. No I don’t know No I don’t know Yes Not applicable Yes Not applicable 8% 3% 5% 8% 25% 20% 64% 67% 7 Business impact: Insights SIZE OF ENTERPRISE The survey in April showed micro and small enterprises were slightly more affected in terms of loss of revenue, but a few months later the larger enterprises are suffering more of a loss compared to their figures for last year. Micro Small Medium Large Total March 2020 83% 83% 76% 80% 83% % of enterprises with more than 50% revenue decline May 2020 95% 96% 97% 98% 95% Average (mean) percentage March 2020 -72% -70% -63% -62% -71% revenue decline in 2019, compared to 2020 May 2020 -91% -92% -94% -93% -92% SUB-SECTOR Enterprises providing activities and experiences have seen the most dramatic loss in revenue compared to the same month the previous year, together with transport, accommodation and tour operators. Community-based enterprises have seen the least decline. Transport businesses are holding the least forward bookings as a percentage of last year, followed by activity/experience providers and accommodation. Accommodation Activity/ Community- Conservancy/ F&B MICE Tour Transport Other Total experience based protected area operator Average (mean) March -66% -80% -76% -87% N/A -83% -74% -69% -73% -71% percentage 2020 revenue decline in 2020, May compared -93% -95% -63% -81% -76% -94% -95% -94% -92% -92% 2020 to 2019 Average (mean) March -72% -71% -83% -73% N/A -70% -66% -73% -69% -70% forward 2020 bookings decline in 2020, May compared -70% -72% -64% -62% -67% -61% -63% -79% -70% -69% 2020 to 2019 8 Mitigation measures Employment measures The most common mitigation measure regarding workforce management remains wage reduction – as it was during the last survey, and it has increased to include 55% of enterprises with more than half their workforce on reduced wages. The number of enterprises employing furlough measures has stayed constant, as have the numbers of enterprises making redundancies. 43% of enterprises say they have not made any redundancies. REDUCED WAGES Reductions in wages have increased since the previous surveyed month of March. Currently 55% of enterprises (50% in March) have reduced wages for more than 50% of staff, and 40% (36% in March) of enterprises have reduced wages for all staff. 12% have not reduced wages at all, compared to 18% in March. March 2020 May 2020 70%+ 60% 50% Responding enterprises 40 40% 36 30% 26 26 20% 18 12 10 10% 7 3 3 2 2 3 2 1 1 1 1 1 1 1 1 1 1 1 0% None 0-9 10 - 19 20 - 29 30 - 39 40 - 49 50 - 59 60 - 69 70 - 79 80 - 89 90 - 100 All I don’t know % of staff on reduced wages 9 FURLOUGHED STAFF The number of enterprises to have furloughed staff since the previous survey has stayed constant, with a minor reduction in the number of enterprises who have furloughed all staff. 34% of enterprises (34% also in March) have furloughed more than 50% of staff, and 16% of enterprises have furloughed all staff, compared to 18% in March. 27% have not put any staff on furlough, compared to 33% in the previous survey. March 2020 May 2020 70%+ 60% 50% Responding enterprises 40% 33 32 31 30% 27 20% 18 16 10% 8 5 3 3 3 3 3 4 1 1 1 1 1 1 1 2 1 3 2 0% None 0-9 10 - 19 20 - 29 30 - 39 40 - 49 50 - 59 60 - 69 70 - 79 80 - 89 90 - 100 All I don’t know % of staff furloughed 10 REDUNDANCIES The numbers of enterprises making most of their staff redundant has stayed constant over the last few weeks. 11% of enterprises (11% in March) have made more than 50% of staff redundant, and 5% of enterprises (7% in March) made all staff redundant. 43%, however, have not made any redundancies – compared to 53% in the previous survey. March 2020 May 2020 70%+ 60% 53 50% 43 Responding enterprises 40% 33 31 30% 20% 7 10% 5 3 3 4 2 1 1 2 1 1 2 2 1 1 1 1 2 0 0 0 0% None 0-9 10 - 19 20 - 29 30 - 39 40 - 49 50 - 59 60 - 69 70 - 79 80 - 89 90 - 100 All I don’t know % of staff made redundant 11 Mitigation measures: Employment measures insights SIZE OF ENTERPRISE The table below shows the percentage of each size of enterprise that has introduced these measures to more than 50% of staff. Since the last survey where the workforce of small and medium business was relatively more impacted by these measures, there has been a shift towards greater impact on workforces of medium and large enterprises. Medium enterprises are the most affected in terms of wage reduction and furlough, followed by large businesses, and large business are the most likely to have made more than half their staff redundant. Micro Small Medium Large Total March 2020 42% 64% 75% 61% 50% Reduced wages May 2020 46% 67% 89% 67% 55% March 2020 27% 38% 38% 26% 32% Furloughed staff May 2020 25% 39% 68% 51% 33% March 2020 11% 31% 12% 4% 11% Redundancies May 2020 11% 14% 14% 16% 12% SUB-SECTOR The table below shows the percentage of each type of enterprise that has introduced these measures to more than 50% of staff. Proportionally, tour operators and transport have been most active in reducing staff wages, and many conservancies and transport enterprises have furloughed staff. The least proportion of MICE enterprises have furloughed and made staff redundant. Accommodation and F&B enterprises have also done well in retaining staff and avoiding redundancy. Accommodation Activity/ Community- Conservancy/ F&B MICE Tour Transport Other Total experience based protected area operator March 52% 37% 13% 77% N/A 57% 52% 47% 50% 50% 2020 Reduced wages May 55% 53% 58% 46% 49% 52% 64% 60% 48% 55% 2020 March 34% 25% 25% 27% N/A 27% 36% 36% 25% 32% 2020 Furloughed staff May 35% 33% 33% 46% 39% 26% 33% 40% 23% 33% 2020 March 9% 17% 50% 14% N/A 9% 15% 9% 10% 11% 2020 Redundancies May 10% 14% 24% 0% 10% 11% 18% 26% 11% 13% 2020 12 Mitigation measures: Other measures Enterprises have put in place a variety of measures to help mitigate against the impacts on their business. The most commonly applied measures are supporting deferment of bookings instead of cancellation at 67%, providing refunds at 64% and temporary closure at 57%. This compares to the top measures recorded in April as; temporary closure at 69%, supporting deferment of bookings instead of cancellation at 60%, and significant downscaling at 58%. In the current survey, 52% (51% in previous survey) have canceled planned investments or upgrades which will have consequences for other areas of the economy. 45% have lowered prices compared to 28% in March, 42% have already borrowed capital (up from 25% in March), and 31% have invested in upskilling staff (17% in March). 60% of responding enterprises are not, so far, considering permanent closure. Already done Considering Not considering Not applicable I don’t know March 2020 18% 23% 18% 33% 8% Introduced vouchers May 2020 24% 15% 29% 29% 3% March 2020 13% 29% 11% 42% 5% Introduced alternative products May 2020 23% 24% 18% 34% 2% March 2020 53% 18% 8% 19% 2% Amended cancellations/ refund policies May 2020 55% 15% 10% 19% 1% March 2020 60% 16% 5% 16% 3% Supported deferment instead of cancellation May 2020 67% 12% 5% 15% 1% March 2020 54% 13% 11% 19% 3% Provided refunds May 2020 64% 8% 9% 18% 1% March 2020 28% 29% 19% 21% 2% Offered lower prices May 2020 45% 22% 19% 13% 1% March 2020 36% 45% 5% 12% 3% Adjusted marketing strategies May 2020 55% 33% 4% 7% 1% March 2020 25% 36% 24% 12% 3% Borrowed capital from bank, family/friends, other May 2020 42% 18% 25% 13% 3% March 2020 17% 23% 22% 36% 2% Upskilling staff through online courses and webinars May 2020 31% 17% 21% 29% 1% Investing in renovations, March 2020 13% 19% 46% 21% 1% upgrades or business improvements May 2020 22% 18% 39% 20% 1% March 2020 51% 15% 11% 22% 1% Canceled planned upgrades, expansions or improvements May 2020 52% 14% 13% 20% 1% March 2020 58% 17% 8% 15% 2% Significant downscaling May 2020 49% 17% 14% 18% 2% March 2020 69% 10% 14% 6% 2% Temporary closure May 2020 57% 11% 22% 8% 2% March 2020 2% 26% 53% 9% 9% Permanent closure May 2020 1% 20% 60% 11% 8% March 2020 N/A N/A N/A N/A N/A Repurposed business towards a different sector May 2020 10% 23% 36% 29% 2% 13 Mitigation measures: ‘Other measures’ insights SIZE OF ENTERPRISE The table below shows the percentage of enterprises who have already put in place the mitigation measure. Across all measures, medium-sized enterprises are the largest group to have put measures in place, and micro the enterprises the least. Relatively more smaller enterprises have borrowed capital than larger enterprises. Following the pattern of the previous survey, smaller businesses also report fewer temporary and permanent closures than larger businesses. 62% of medium enterprises have canceled planned investments or upgrades. Micro Small Medium Large Total March 2020 14% 23% 31% 33% 18% Introduced vouchers May 2020 20% 28% 37% 25% 24% March 2020 10% 19% 17% 26% 13% Introduced alternative products May 2020 20% 27% 28% 27% 23% March 2020 48% 61% 67% 86% 53% Amended cancellations/ refund policies May 2020 51% 58% 73% 56% 55% March 2020 54% 71% 73% 82% 60% Supported deferment instead of cancellation May 2020 62% 73% 82% 80% 67% March 2020 51% 58% 60% 67% 54% Provided refunds May 2020 60% 70% 73% 71% 64% March 2020 24% 29% 44% 56% 28% Offered lower prices May 2020 42% 51% 52% 47% 45% March 2020 30% 42% 58% 60% 36% Adjusted marketing strategies May 2020 49% 63% 70% 67% 55% March 2020 24% 30% 19% 26% 25% Borrowed capital from bank, family/friends, other May 2020 40% 49% 34% 38% 42% March 2020 15% 16% 27% 30% 17% Upskilling staff through online courses and webinars May 2020 30% 25% 49% 42% 31% Investing in renovations, March 2020 15% 10% 9% 11% 13% upgrades or business improvements May 2020 22% 23% 27% 16% 22% March 2020 47% 58% 61% 65% 51% Canceled planned upgrades, expansions or improvements May 2020 49% 58% 62% 53% 52% March 2020 53% 70% 73% 75% 59% Significant downscaling May 2020 44% 58% 58% 65% 49% March 2020 65% 75% 77% 79% 69% Temporary closure May 2020 53% 63% 65% 62% 57% March 2020 2% 2% 2% 5% 2% Permanent closure May 2020 1% 1% 2% 2% 1% March 2020 N/A N/A N/A N/A N/A Repurposed business towards a different sector May 2020 10% 8% 9% 11% 10% 14 SUB-SECTOR • The accommodation sub-sector is the group to have issued the most refunds at 74% and supported deferment at 74%. It is also relatively the largest sub-segment to have reduced prices, and to have borrowed capital. • As in the previous survey, activity and experience providers are the largest group to have closed permanently (at 2%, down from 4% in April), together with tour operators (also at 2%). 63% have also canceled planned investments or upgrades. • Community-based enterprises have implemented proportionally the fewest measures across the board, and they are also the lowest in terms of temporary closures (at 42%, up from 38% in April), possibly reflecting their lower market dependence and debt exposure. 50% of entities have upskilled staff, and 58% have invested in upgrades or improvements – the highest sub-segment to do so. • Conservancies, reserves or enterprises in protected areas are the sub-sector to have least borrowed at 23% and are the largest group to have closed temporarily at 69%. • The food and beverage (F&B) sub-segment (new to this survey) has relatively invested the least in upskilling staff at 22%, or in improvements and physical upgrades at 15%. • The MICE sub-segment has maintained prices, with just 32% offering lower deals. • 70% of tour operators have supported deferment instead of cancelation, the largest group to do so. Only 29% have offered lower prices, and 2% of responding enterprises have permanently closed. • Transport is proportionally the largest sub-sector to have downscaled, as in the previous survey (71% compared to 66% in April). 60% have canceled planned upgrades and 60% are temporarily closed. 15 Accommodation Activity/ Community- Conservancy/ F&B MICE Tour Transport Other Total experience based protected area operator March 20% 12% 0% 14% N/A 5% 22% 19% 15% 18% Introduced 2020 vouchers May 27% 23% 8% 15% 24% 10% 22% 12% 16% 24% 2020 March Introduced 9% 10% 13% 27% N/A 31% 13% 23% 17% 13% 2020 alternative products May 14% 31% 25% 23% 31% 45% 20% 26% 25% 23% 2020 March Amended 61% 40% 38% 41% N/A 51% 57% 56% 35% 53% 2020 cancellations/ refund policies May 67% 52% 42% 62% 13% 36% 52% 43% 39% 55% 2020 Supported March 64% 48% 0% 55% N/A 73% 68% 54% 45% 60% deferment 2020 instead of May cancellation 74% 59% 25% 69% 22% 64% 70% 52% 60% 67% 2020 March 64% 37% 25% 50% N/A 45% 56% 51% 35% 54% Provided 2020 refunds May 74% 62% 42% 62% 22% 53% 59% 64% 52% 64% 2020 March 36% 19% 0% 18% N/A 29% 21% 36% 16% 28% Offered 2020 lower prices May 56% 37% 50% 31% 33% 32% 29% 40% 33% 45% 2020 March Adjusted 37% 29% 25% 50% N/A 53% 29% 37% 37% 36% 2020 marketing strategies May 57% 58% 42% 62% 54% 55% 49% 48% 55% 55% 2020 Borrowed March 29% 29% 13% 36% N/A 23% 20% 26% 16% 25% capital from 2020 bank, family/ May friends, other 47% 39% 42% 23% 46% 36% 36% 40% 31% 42% 2020 Upskilling staff March 9% 17% 13% 18% N/A 38% 23% 17% 28% 17% through 2020 online courses May and webinars 20% 28% 50% 38% 22% 51% 45% 43% 56% 31% 2020 Investing in March renovations, 18% 13% 0% 5% N/A 7% 9% 6% 9% 13% 2020 upgrades or business May 29% 20% 58% 31% 15% 19% 17% 12% 8% 22% improvements 2020 Canceled March planned 56% 47% 13% 77% N/A 55% 45% 43% 45% 51% 2020 upgrades, expansions or May 55% 63% 33% 46% 42% 58% 46% 60% 43% 52% improvements 2020 March 65% 52% 25% 64% N/A 52% 54% 66% 50% 59% Significant 2020 downscaling May 49% 51% 42% 38% 40% 52% 48% 71% 48% 49% 2020 March 82% 63% 38% 64% N/A 64% 54% 54% 56% 69% Temporary 2020 closure May 57% 63% 42% 69% 54% 52% 59% 60% 50% 57% 2020 March 2% 4% 0% 0% N/A 1% 2% 1% 2%% 2% Permanent 2020 closure May 1% 2% 0% 0% 0% 0% 2% 0% 0% 1% 2020 Repurposed March business N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2020 towards a different May 9% 16% 17% 8% 4% 12% 16% 15% 14% 10% sector 2020 16 Reopening CURRENT STATUS The majority (61%) of responding enterprises are currently not operating but plan to reopen. A further 25% have already reopened and are partially operating. Not currently operating 61 but will reopen Was closed but now 25 partially operating Partially operating 8 since March 2020 Fully operating and 3 have been since March No longer operating 3 and will not reopen Was closed but now 1 fully operating 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% TIMEFRAME Only businesses who indicated they were temporarily closed responded to the following sections. This constitutes 899 businesses (61% of the total sample). 54% of non-operating respondents indicate they will reopen by September, but many are still unsure. 31% of respondents say when they reopen it will be in full, and 69% indicate it will be partial reopening. June 2 July 19 August 13 September 20 October 7 November 5 December 4 2021+ 6 I don’t know 23 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 17 DECIDING FACTORS The following pre-conditions to opening have been prioritized by enterprises. The vast majority require inbound international travel to resume, closely followed by a requirement for domestic travel to resume. Inbound overseas leisure travel resumes 66 Domestic leisure travel and tourism resumes 58 Attractions and activites can operate 56 Leisure facilities, e.g. restaurants and casinos 49 Regional leisure travel resumes 46 More domestic business travel occurs 39 Inbound overseas business travel resumes 39 Regional business travel resumes 33 International MICE resumes >50 19 Domestic MICE resumes >50, <100 13 Domestic MICE resumes <50 11 Domestic larger MICE resumes >100 11 I don’t know 2 None 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% PRIMARY CONCERNS FOR REOPENING 66% highlight insufficient demand to break-even as their primary concern, followed by insufficient demand to make a profit. Respondents are immediately concerned with the market and the implications this has on the business. Insufficient demand to operate at break-even 66 Insufficient demand to operate at a profit 49 Guest safety 47 Staff safety 42 The cost of complying with COIVD-19 protocol 42 Low rates and competitive environment 30 Implementing/complying with COVID-19 protocol 27 Other 4 None 1 I don’t know 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 18 Support measures Responding enterprises indicated their awareness and uptake of the following supporting mechanisms. The facilities with the most awareness are the UIF scheme and the Tourism Relief Fund of the Department of Tourism. Known eligibility is highest for the UIF scheme and there has been strong uptake for most facilities, the Solidarity Fund and SARS having the least applications. Success rates have improved for most of the schemes, and correspondingly the perception of their value has also improved since the survey in April, notably the Relief Fund at the Department of Tourism. Aware Of those aware, Of those know Of those applied, Of those applied, know eligible eligible, applied successful perceive value March 2020 30% 53% 68% 1% 1% SMME Relief Fund May 2020 47% 25% 75% 11% 50% March 2020 19% 19% 37% 9% 6% IDC Corporate Plan May 2020 27% 13% 49% 8% 50% March 2020 84% 39% 60% 2% 2% Department of Tourism Relief Fund May 2020 89% 41% 89% 32% 81% March 2020 96% 67% 69% 5% 3% UIF scheme May 2020 97% 73% 92% 71% 78% March 2020 63% 49% 35% 12% 7% SARS tax subsidy May 2020 60% 48% 43% 55% 82% March 2020 69% 23% 48% 1% 1% Solidarity fund May 2020 74% 22% 13% 6% 89% March 2020 20% 42% 55% 14% 8% SA Future Trust May 2020 30% 48% 68% 54% 87% 19 Needs Enterprises selected their top five outstanding needs. The five most repeated needs from all enterprises in June 2020 are: liquidity (cashflow), financial support for recovery, tax relief, expert advice on business recovery, and advice on health and safety measures. Support for commercial debt repayment is also a priority. These have not changed since the last survey was conducted in April, indicating an on-going need to find solutions to these issues. March 2020 May 2020 100% 90% 80% 70% 66 64 60% 52 51 47 50% 40 40% 32 25 25 24 30% 22 21 23 22 17 17 17 17 20% 13 13 10 5 5 10% 4 3 4 0% Financial support for cashflow Financial support for recovery Tax reductions or deferments Expert advice on business strategy and recovery Commercial debt repayment support Best practices shared from other businesses Research and forecasts for business planning Advice on communicating with customers/buyers Virtual training for upskilling entrepreneurs and staff Advice on health and safety precautions or certification Other I don’t know None ‘Other requests’1 for support include: ‘need clearer policy decisions and dates from government’, ‘open up for domestic tourism’, ‘clear markets focus and communication from SA Tourism so we can align to their targets’, ‘more focus on rural areas including rate cutting’, ‘allow rural safari and lodge operators to open if casinos are open’, ‘cease relief discrimination on the basis of race – many white-owned companies are forced to retrench hundreds of black staff’, ‘staff are demotivated without guests – we need training and the J2E Journey to Excellence follow-up training’, ‘Tourism Relief needs to be more responsive and better at communicating’, ‘reduce local municipality rates, ‘extend TERS until international border open’, ‘Insurance should be paying out for Business Interruption cover’, and ‘commercial banks are rejecting applications because we work in tourism.’ These are not verbatim to protect identities of respondents. 1 20 Needs: Insights SIZE OF ENTERPRISE The graphic below shows the percentage of enterprises that identified a particular need. Micro enterprises identified their biggest need as cashflow and capital for recovery. Small enterprises prioritized capital for recovery and cashflow. Medium enterprises indicated a preference for tax relief and cashflow, and large enterprises had a more even breakdown across all measures – still with a preference for tax relief and capital for recovery. Micro Small Medium Large Total March 2020 18% 15% 17% 12% 17% Advice on communicating with customers May 2020 19% 14% 10% 22% 17% March 2020 12% 10% 13% 25% 13% Advice on health and safety May 2020 20% 24% 27% 31% 22% March 2020 64% 69% 67% 54% 66% Financial support for cashflow May 2020 51% 55% 52% 38% 52% March 2020 62% 72% 52% 44% 63% Financial support for recovery May 2020 50% 58% 44% 42% 51% March 2020 42% 57% 64% 54% 47% Tax relief May 2020 33% 52% 58% 45% 40% March 2020 22% 34% 27% 32% 25% Commercial debt repayment support May 2020 19% 30% 22% 16% 21% March 2020 20% 18% 27% 23% 20% Research/forecasts for business planning May 2020 16% 15% 21% 20% 17% March 2020 22% 27% 37% 26% 25% Best practices from other business May 2020 21% 22% 28% 13% 21% March 2020 33% 32% 29% 19% 32% Expert advice on business recovery May 2020 24% 25% 23% 13% 24% March 2020 14% 12% 12% 11% 13% Virtual training for upskilling May 2020 16% 19% 19% 15% 17% 21 Survey details Methodology ANNUAL TURNOVER IN RANDS (MN) Our survey sample is made up of a wide spectrum of tourism 60% + 53 businesses across South Africa. The survey was distributed 50% through the networks of the Department of Tourism, and the Tourism Business Council of South Africa and all its 40% member associations. 30% The questionnaire was sent out on Thursday, 18th June and closed on Friday, 26th June 2020. The questionnaire 20% 16 11 was distributed electronically by email. It had five sections: 10% 7 7 4 4 general profile questions (which provide a breakdown 0 of the type of responding businesses); questions on the 0% business impact of COVID-19; questions on the business’s I don’t know 0-3 3-5 5 - 15 15 - 40 40 - 200 200 - 500 500 + response; the support measures available; and outstanding needs of the businesses. Profile of responding businesses TYPE OF ENTERPRISE Accommodation 3 The survey yielded 1501 responses. After the question 11 ‘Has your business been affected by COVID-19?’, 18 were Activity/experience discounted from remainder of the full analysis, leaving Community-based 1483 respondents. The pre-COVID profile of respondents 16 Conservative/protected areas can be seen below: 59 F&B 5 5 SIZE OF ENTERPRISE BY NUMBER MICE OF EMPLOYEES2 Tour operator 9 1 1 Transport Micro 65 Other Small 23 PERFORMANCE (PRE-COVID) OF ENTERPRISES Medium 8 Growing Constant Decline Large 4 Micro 40% 26% 34% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Small 44% 35% 21% Medium 59% 19% 22% Large 45% 24% 31% Size has been determined by number of employees. 1 - 10 = micro; 11 - 50 = small; 51 - 250 = medium; 251 + = large. 2 22 MARKET FOCUS AGE OF BUSINESS IN FEBRUARY 2020 Respondents average (mean) market share is: 70%+ International Domestic Africa region 60 60% 50% 40% 30% 26 27% 46% 20% 10 48% 10% 3 0 0% 0 -1 1-3 3 - 10 10 + I don’t know PROVINCE(S) OF OPERATIONS Respondents indicate all the provinces (can be more than one) where they have operations. The total is therefore not 100%. Eastern Cape KwaZulu-Natal North West Free State Limpopo Northern Cape Gauteng Mpumalanga Western Cape 33% 19% 27% 19% 12% 27% 16% 27% 60% 23