Covid-19 to cost travel and tourism 25 percent of revenue

Covid-19 is likely to cost the travel and tourism sector more than 25 percent of revenue in 2020, leading hospitality group African Sun Limited (ASL) chairman, Alex Makamure, has said.

The global pandemic, which broke out in China late last year before spreading to all over the world has resulted in the closure of international borders as governments imposed lockdowns, hard-hitting the tourism sector.

“It is the company’s view that Covid-19 pandemic could adversely impact travel and tourism by more than 25% in 2020, an equivalent of three months’ worth of tourism activity,” said Makamure, in the company’s 2019 financial report released this week.

“Many countries have grounded their airlines, implemented travel restrictions and quarantine measures in a bid to contain the impact of Covid-19 and flatten the inflection curve. These measures are weighing on the group’s domestic and international business outlook and are expected to result in cancellations of bookings or deferrals without concrete dates.”

Makamure added: “As of 6 May 2020, our statistics have shown that we have had 31 907 room nights cancelled, which is quite substantial for the business. However, as lockdowns are proving to have an extremely high economic cost, governments world over have started looking at alternatives that will be less costly and more effective in the long-term at protecting communities and the economy.”

While countries have begun relaxing lockdown measures, international travel remains restricted and tourism is yet to pick across the world.

Turning to 2019 performance by ASL, Makamure said: “The financial year 2019 was characterised by a volatile economy, a few political disturbances and a series of monetary and fiscal policy changes. These factors resulted in a challenging business environment in 2019, with the greatest impact felt in the first quarter where we had cancellation of bookings from both the domestic and foreign market.”

He said the combined impact of those macroeconomic and political developments on their business was reflected in the reduction in volumes from both our local and export markets.

“Group inflation adjusted revenue for the year ended 31 December 2019 was ZWL914 million; a 68% growth from prior year largely driven by the average daily rate (“ADR”),” said Makamure.

“ADR grew by 102% from ZWL869 recorded last year to ZWL1 759 as the hotels continued to align room rates with interbank exchange rates during the year. Occupancy for the year closed at 48%, compared to 59% recorded last year. The comparable period benefited from a relatively stable economy, elections and political developments. The local market was negatively affected by the January 2019 protests and low disposable incomes, with room nights declining by 15% from 214,892 reported last year to 181,698 for the period under review.”

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