Cashflow Crisis Hits Tourism Sector
20 000 jobs at risk, as tourism sector shuts down
- Tourism operators in cash-flow crisis
- Operators contemplate shutting down
As the tourism sector shuts down as a result of the effected travel ban resulting from COVID-19 pandemic, close to 20 000 direct jobs in the sector are at risk, said Lily Rakorong, Chief Executive Officer (CEO) of the Hospitality and Tourism Association of Botswana (HATAB).
Tourism is the second largest contributor to the Gross Domestic Product (GDP), after the mining sector. According to Rakorong, over 18 000 people are directly employed by the sector, with the numbers ballooning to over 30 000 when supporting services are included. She revealed this in an interview with The Botswana Gazette.
According to World Travel and Tourism Council (WTTC), tourism contribution to GDP has increased from 13 percent in 2008 to the current levels of 21 percent in 2017 and 19 percent for first quarter of 2018, second after the mining sector.
The 18 000 plus jobs are at risk according to Rakorong. Last week, Botswana Tourism Organisation (BTO) CEO Myra Sekgororoane announced a travel ban. Rakorong said there are tour operators in Botswana, who focused specifically on the Chinese market. “Those operators have recorded 100 percent cancellations. This means that they will be making zero revenue.”
Further, government has cancelled all conferences which were booked for this year, and guests as well as tourists have also cancelled their bookings.
According to Allistair MacFarlane, Managing Director (MD) of Africa Wild Safaris, the travel ban means that even if people wanted to travel, they cannot. “This of course impacts business interruption insurance cover. We are uninsured until the travel ban is lifted. All the camps are shut,” he said, adding that his 200 plus staff is on three months special leave with full pay for now.
He said all lodges, mobile operators and hotels are doomed. At Cresta Marakanelo Group, Managing Director (MD) Mokwena Morulane said they have uncountable cancellations as a result o Coronavirus. He said they anticipate serious losses this financial year because revenue will be seriously eroded.
According to the HATAB CEO, their members, which are the majority of tourism sector players, are planning to retrench workers because businesses cannot afford to pay salaries while on shut down. “There is no business continuity. Our members are in a cash-flow crisis,” she said, adding that already, hundreds of employees who were on temporary contracts have been laid off. “Even the full time employees could lose their jobs,” she said. Further, Rakorong said other tour operators are contemplating business closure.
“The sad thing is that some businesses had taken credit facilities from commercial banks, and are supposed to honour monthly repayments. With this total shut down, businesses will not make money,” she revealed.
Rakorong is hoping that government will somehow step in with some aid, to avoid a total collapse of the tourism sector. HATAB is working on a document which will advice stakeholders and government on ways through which jobs can be saved. The document will also advice on how to ensure that businesses stay afloat, according to Rakorong. Further, she said the document will also help with a recovery plan to ensure that post the Coronavirus pandemic, the tourism sector is not rebuilt from scratch. However, President Mokgweetsi Masisi said government has appointed a committee which will discuss and find ways of tackling the Coronavirus pandemic. In a press conference last week, Masisi said government will consider some form of aid, to help affected businesses.