Preliminary Economic Impacts of the COVID-19 Pandemic on the Hotel Sector in South Africa

Abstract

Emerging infectious diseases and pandemics place a substantial burden on global economies and public health. The hospitality industry and global health pandemics are fundamentally linked, and the sector is highly vulnerable to pandemics. The COVID-19 pandemic (coronavirus) has triggered an unprecedented crisis in the hospitality industry globally, and in particular, the hotel sector. As governments have introduced extraordinary measures to contain the virus, such as travel restrictions and physical distancing, which have brought the hotel sector to a standstill. This paper examines the preliminary economic impacts of the COVID-19 pandemic on the hotel sector in South Africa. The data for this paper is based on the hotel sector specifically, and is extracted from a larger dataset that examined the economic impacts of the COVID-19 pandemic on all accommodation establishments in South Africa. Online surveys were administered to accommodation establishment managers. Approximately 3 000 accommodation establishments were targeted, 482 responded, of which 67 were hotels. The study confirms that the hotel sector in South Africa has experienced severe economic impacts due to the COVID-19 pandemic, and a number of hotels face the risk of bankruptcy and permanent closure. Employment has also been substantially affected by job losses, reduced pay and staff made redundant. Current concerns facing hotels are cash flow, travel restrictions, guest cancellations, low consumer spending, the overall economic uncertainty of the industry, as well as the uncertainty of the COVID-19 pandemic.