Pay cuts, retrenchments and closures – how hotels, lodges and B&Bs have been hit by the coronavirus lockdown

A new survey of South Africa’s accommodation business sector shows how various hotels, lodges and B&Bs are struggling under the continued coronavirus lockdown, which has kept the travel and tourism industry shut down for almost three months.

The survey, conducted by accommodation booking portal LekkeSlaap.co.za, polled 7,262 businesses across all provinces in South Africa, on all aspects relating to their operations and the Covid-19 outbreak and government reponse.

This includes how the outbreak and lockdown has impacted their businesses, payment of salaries, retention of staff, as well as their views on the prospects of the industry going forward.

Overall, LekkeSlaap found that while the vast majority of businesses were negatively impacted by the outbreak and lockdown, they were largely able to keep staff on book – with reduced pay – and they remain hopeful that the industry will be able to be salvaged by the end of the year.

Despite the optimism, the Covid-19 pandemic has profoundly impacted the South African travel accommodation industry, leaving uncertainty, financial difficulty and, in many cases, economic devastation in its wake, LekkeSlaap said.

“Results show that a 56.5% majority of businesses have been largely impacted and that the next few months will be a struggle. 27.6% indicated a high likelihood that their business will not survive – of which 3.9% said that their business definitely would not survive the pandemic,” it said.

Limpopo (37.5%), North West (37.8%), Mpumalanga (33.5%) and the Northern Cape (34.2%) reported a particularly high chance of business failure.

“With Limpopo and Mpumalanga widely regarded to be the provinces with the most locally and internationally sought-after game viewing opportunities, these potential business failures could have a dramatic long-term impact on South Africa’s tourism economy, with noteworthy short-term economic difficulty already being be visible in these results,” the group said.

Comparatively 82.6% of respondents reported that their businesses were stable before Covid-19, of which 49.8% indicated steady revenues compared to the previous year and 32.8% indicated that their businesses were thriving.

Pay cuts

Given the dramatic effect Covid-19 has had on revenues, owners were also asked whether they’ve had to implement any salary reductions or retrenchments as a direct result of the pandemic.

78.1% of travel accommodation businesses report instituting some form of temporary salary reductions as a direct result of Covid-19, of which 24.7% reported significant temporary salary reductions and 31.8% reported their entire workforce on temporary zero pay.

Only 21.9% of respondents reported that their workforce has been unaffected by the pandemic.

The results further show that at 77.6%, hotel representatives reported the highest number of significant salary reductions and at 70.1%, lodge representatives’ reports come in at a close second.

With self-catering representatives reporting the lowest number of businesses implementing significant salary reductions (54.6%), this data shows that the majority of travel accommodation businesses nationwide has had to significantly reduce payroll costs.

Retrenchments

In contrast with 56.5% of respondents that have implemented significant temporary salary reductions, 62% of respondents said that they have not permanently retrenched any staff as a direct result of Covid-19.

Despite permanent retrenchments being indicated in minority, 20.7% of businesses say they have had to permanently retrench some staff as a direct result of Covid-19, while 9.3% have had to make significant retrenchments and 8% have entirely retrenched their workforce.

KwaZulu-Natal respondents reported the largest number of significant retrenchments at 24.3%, demonstrating a significantly high overall number on provincial level, with the far less densely populated Northern Cape reporting 17.9% significant retrenchments.


Read: Layoffs, pay cuts and shutdowns as major South African hotels count R1.7 billion in losses

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Pay cuts, retrenchments and closures – how hotels, lodges and B&Bs have been hit by the coronavirus lockdown