No easy way back for hotels

Relaxed lockdown offers hope but lack of overseas visitors bites

07 March 2021 - 00:10 By JANE STEINACKER

SA's hotel industry is facing an uphill battle to recover after almost a year of restrictions on travel and gatherings - and the prospects for staff either returning to work or earning full pay are still dim. The move to level 1 lockdown this week, which enables larger gatherings and lifts most restrictions on the sale of alcohol, may help, and Easter could also bring in new business. Jeremy Clayton, executive director of the President Hotel in Cape Town, said this Easter season was "critical to [the hotel's] survival". The hotel has seen a healthy uptick in bookings and no increase in cancellations, but is only forecasting a 50% occupancy rate. Previously it would have been between 80% and 90% full during the season.Likewise, at City Lodge Hotel Group, bookings are improving.Lindiwe Sangweni-Siddo, COO at City Lodge Hotel Group, said: "Bookings for the Easter weekend, April 2 to April 5, are picking up and are currently at higher occupancy rates than the rest of the weekends in March and April." Tony Romer-Lee, managing executive at Valor Hospitality, said the Easter season was slowly starting to pick up, but with lead times for bookings being so short, often just a few days, it was too early to tell. The company manages nine properties in SA, including Spier Wine Farm and Hotel and the Fancourt Hotel.But hotel groups have a long, tough road ahead of them due to the hefty blow on trade caused by lockdowns first implemented from late March 2020. Stats SA's tourist accommodation data for December 2020, published last week, shows a 51.5% decrease in income for the sector compared to December 2019. There was an average 41.2% decrease in the number of "stay unit nights" sold, coupled with an average 17.5% decrease in the average income for those stays.Last week, City Lodge Hotel Group reported a 73% decrease in revenue for the six months to December 31 2020 compared to the same period a year before. The hotel group's revenue dropped to R215m from R809m. Its occupancy rate for the period in 2020 dropped to 17% from 54% the previous year. Only 47 of the group's 63 hotels are open. Across Southern and East Africa it owns and operates the brands Fairview, City Lodge, Courtyard Hotel, Road Lodge and Town Lodge. Its newest hotel, Courtyard Hotel Waterfall City, opened this week. Andrew Widegger, CEO of City Lodge Hotel Group, said they had not made retrenchments but had cancelled their room-cleaning service, which had reduced staff by 25%. Employees across the group are still on reduced pay. The company did not disclose the percentage of the cut in pay.Other hotel groups are in the same boat. William McIntyre, regional director for hotel chain Radisson in Africa, said: "My ribs are sore from getting knocked down and getting back up again, but we are resilient." Radisson has closed two out of 22 properties - Park Inn in Sandton and Radisson Blu in Sea Point - at the owners' request. This has led to 160 job losses in SA, while elsewhere in the Southern African Development Community region it has retrenched 75 employees, reducing its staff complement of 3,700.Radisson is a management company that manages hotel properties on behalf of the owners, who could include wealthy individuals and corporate and institutional investors. In December 2020 and January 2021 the group's occupancy dropped to 32% from 68% in the same period a year earlier.The most substantial impact on revenue has been the dearth of international travellers, who previously constituted two-thirds of the bookings at Radisson hotels. "We have no international business," McIntyre said. And margins have shrunk for the business it is able to attract.Radisson hotels are charging rates between 45% and 55% lower than in 2019 despite a 6% increase in costs in the food and beverage division and an increase of between 8% and 9% in the cost of making rooms comply with Covid-19 health and safety standards.Romer-Lee said the tightening of lockdown restrictions in December 2020 as well as the loss of international visitors in the first quarter of this year, when hotels and lodges are traditionally at their busiest, had hurt the business.In the first quarter of this year the hotels and lodges in its chain were at 35% occupancy compared to last year's 80%.He said the decrease in demand and revenue had forced the group to redesign its offerings for guests. These include what it refers to as a mini-bubble, where areas of the hotels are used for a group of people travelling together, such as a corporate team, which are then isolated from all other areas. The guests and staff do not leave the designated area for the duration of the booking and all activities, including meals, are restricted to this area. The group also offers rooms as mini office suites where remote workers can "enjoy a change of scenery".He anticipates that when international tourists start booking holidays in SA again, the length of stays will be longer because travellers will want to limit potential exposure in airports.Likewise, Clayton said the President Hotel in Cape Town was creating new packages to attract guests, generate revenue and keep the business afloat during this period. Packages include catering for the digital nomad with daycation packages allowing guests to work at the hotel for a day, which includes a car-wash service, or allowing day visitors to use the swimming pool during the day to contribute to income.In December, the President had an occupancy rate of 50% compared to 80% in December 2019. In January and February, bookings dropped to 20% from between 80% and 90% in the same period in 2020, said Clayton.He said the business had been forced to retrench staff and had moved some employees to a rotation cycle whereby they work fewer hours and their salary is reduced accordingly. The exact figure of how many retrenchments had taken place was not available.Sun International is in a closed period ahead of its results being released on March 15 and therefore declined to comment. Tsogo did not respond to a request for comment.

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