Marcel von Aulock, the CEO of SA’s largest hotel group, Tsogo Sun, may be one of the few people who doesn’t have cabin fever right now. Speaking to the FM from his farm in the Magaliesburg, 50km west of Joburg, Von Aulock says: "If you’re going to be in lockdown, I’d rather be in the country, with space."
Out in the Magaliesburg, the biggest talking point right now is which of the nearby guesthouses and lodges has been hit by thieves seeking booze. "You hear it all the time," says Von Aulock, "lodges are being broken into and people are stealing whatever is in the bar. Just last night, our hotel in Rustenburg was broken into, and the guys were looking for booze and TVs."
It adds insult to injury for an industry that has already taken a beating from Covid-19. If airlines were at the frontline, the hospitality industry was in the trenches right behind them. "We were the canary in the coal mine back in February. Usually, if your hotel bookings move by R500,000 in a day, there’s something serious going on. But in March, we began to see more than R5m worth of cancellations per day, and we realised the world was shutting down," he says.
Tsogo Sun, which owns such landmarks as Montecasino, the Cullinan in Cape Town and the Beverly Hills hotel in Umhlanga, has temporarily shut down all its 113 hotels. Von Aulock believes that eventually all of them will reopen. "None was in material distress, so if you roll the clock forward two years, we should have the same portfolio," he says.
Under President Cyril Ramaphosa’s strict level 4 lockdown, hotels, restaurants and hospitality companies can’t operate. Not that it would actually help Tsogo if the lockdown were lifted. "If we were told that we could open up, I wouldn’t," says Von Aulock. "The demand isn’t there. It’s pointless operating with just 10%-15% occupancy levels. You’ll just burn cash."
Maybe the people actually working in the industry you govern matter far less than scoring political points
Rather, demand will only return once everyone goes back to work and begins travelling again. But you’d probably have more luck catching a flight to Tuscany tonight than predicting exactly when that particular shroud will lift from the economy.
The wait is brutal. The UN’s World Trade Organisation (WTO) expects a drop of up to 30% in global revenue this year. "This would mean that between five and seven years’ worth of growth will be lost to Covid-19," says the WTO’s Zurab Pololikashvili.
In SA, an analysis for the National Treasury showed that even by the third quarter of this year, the tourism sector would be operating at only 50%. It’s a blow for the whole country too, since tourism contributed an estimated R145bn to SA’s GDP last year — 2.9% of the total — while the sector employs 4.5% of the workforce.
Surviving this onslaught isn’t easy. The share price of Tsogo Sun Hotels has halved in the past six months, even though it regained 36% over the past month. Tsogo hasn’t yet released financial results for the year to March, though at the half-year stage, it had made R162m in pretax profit. Expect the full-year forecast to be less rosy than Jacob Zuma’s legal prospects.
Still, as SA’s largest hotel operator, Tsogo will most likely come out of this fine. But that’s not something you can say for many others in the industry right now. As Von Aulock says, "there are probably 800,000 people working in the restaurant industry. But if there are a handful of independent restaurants which can survive six months without trading, I’d be surprised."
It doesn’t help that rather than being aided by the government, the industry is instead being kicked in the teeth by tourism minister Mmamoloko Kubayi-Ngubane. In her wisdom, Kubayi-Ngubane has decided that in distributing the R200m in Covid-19 aid to small tourism firms, those with black shareholders will get priority, rather than those which need help first.
Last week, the high court in Pretoria confirmed her right to do this — a ruling which Kubayi-Ngubane said shows there was "nothing racial" in these rules.
However, Von Aulock says: "You can have your view on whatever colour the owners might be, but I can guarantee you that 95% of the staff working for those tourism companies is black."
From her vantage point on her high horse, Kubayi-Ngubane probably can’t see this. Maybe she doesn’t care. After all, in just the past three years, she’s flitted between the ministries of communication, energy and science & technology. Maybe, once you get used to just being a tourist in a ministry for a few months, the people actually working in the industry you govern matter far less than scoring political points.
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