/ 13 July 2009

More lay-offs as shine comes off tourism industry

More jobs losses are expected in Cape Town and Durban as the hotels and events industries are hit hard by the slump in tourism, said debt counselling organisation Consumer Assist on Monday.

”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,” said the organisation’s CEO Andre Snyman.

Snyman said even though schools were closed for holidays in July, revenues were down at hotels and guest house as more families stayed 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.”

He said the company already had significant numbers of people they were helping from the textile industry who were 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 had grown sharply in recent years and airfares to Southern Africa from Europe were among the most competitive in the world, Snyman said.

Tourism’s contribution to gross domestic product (GDP) was R162,9-billion in 2007 or 8,1% of GDP, only marginally above that of mining.

Last year it was R194,5-billion or an 8,5% contributor to GDP.

”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.”

He said it seemed many were holding prices artificially high in the hope of a 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 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 is being considered a luxury. There is a demand now for one day conferences so companies don’t incur accommodation costs or in-house training at companies.”

He said Sol Kerzner’s ”much trumpeted” new mega-five star hotel at the Waterfront had already laid off 50 staff while Asara wine farm laid off just over two dozen staff.

Snyman advised that it was important that those facing cashflow and debt problems as a result of retrenchment or reduced earnings contact debt counsellors before revenue streams dried up or creditors took legal action against them. – Sapa