Hospitality sector hit by new visa regulations
Posted on July 22, 2015
THE stringent new visa regulations have struck a significant blow to the hospitality sector, the latest tourism business index shows while prospects for the rest of the year look dim.
These findings emerge from the business performance index for the sector in the second quarter, released by the Tourism Business Council of SA on Monday, and corroborate other statistics which show a decline in the number of tourists, particularly from China and India.
The council warned the government about the damaging effect that the visa regulations would have on the industry and its fears had been realised, council CE Mmatsatsi Ramawela said on Monday.
The new regulations require foreigners to visit South African embassies and missions abroad in person when they apply for a visa so that biometric information can be recorded. They also oblige parents to carry unabridged birth certificates when travelling with children.
Ms Ramawela said the council — which is the umbrella organisation representing organised business in the local travel and tourism industry — was engaging with the government to have the regulations changed.
The Cabinet has set up an inter-ministerial team under Home Affairs Minister Malusi Gigaba to look into the objections to the regulations.
The tourism business index for the second quarter dropped from the first quarter’s 99.9 to 83.6 — the lowest performance since the third quarter of 2011, when the industry registered an index score of 70.
The index was introduced in 2010, with 100 index points representing normal conditions which reflect that business performance is in line with the long-term index average.
“As expected, xenophobia, the Ebola virus, as well as the new legislation with regards to biometrics and unabridged birth certificates, topped the list of key factors contributing to the drop in performance last quarter,” the council said.
“Anticipated business performance next quarter is below normal … levels and lower than last quarter actuals at 80,6, showing a newly pessimistic outlook,” read the council’s report on the index results.
According to the second quarter report, 16,9% of business respondents attributed the negative impact to the xenophobic attacks; 30% were affected negatively by the Ebola outbreak; and 23,5% experienced a negative effect because of impact due to the new visa regulations.
The accommodation sector achieved worse than normal business performance in the second quarter. The sector was pessimistic about future prospects, expecting lower than normal business performance in the third quarter.
This was mainly due to insufficient overseas leisure demand, input costs and insufficient domestic business.
A study by Grant Thornton, which was commissioned by the council, said SA’s tourism industry lost R886m in direct spending last year because of the new visa regulations and R1.4bn in tourist spend would be lost this year. It estimated SA would lose 100,000 tourists this year alone.
The tourism business index both tracks and forecasts tourism business performance and does not separate its results into domestic and foreign tourism because many tourism businesses deal with both inbound and domestic tourists, which are inextricably linked to performance.
Information for the index is collected through an online survey of tourism businesses completed after the end of the quarter. These businesses include those involved in providing accommodation, tours, coaches, car rentals and conference venues, as well as airlines, travel agents, retail outlets, forex traders, conference venues and attractions.