Finweek_English_Edition_-_March_19,_2020__

@finweek finweek finweekmagazine finweek^ 19 March 2020^37

cover story travel and tourism

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Company P/E Dividend yield % Change in revenue % Change in basic earnings per share

Tsogo Sun Hotels*** - - 2%* -

Tsogo Sun Gaming 6.41 8.63% 5%* 63%****

Sun International 12.29 0 7%* 21%*

City Lodge Hotels 13.05 6.17% 0.2%* -67%

Comair 4.3 0 3.1%* -543%*

Bidvest 14.61 3.04% 9.2%* -27.7%*

Barloworld*** 9.4 5.67% -5.42%** -37%**

Motus 6.69 6.76% 7%* 10%*

Hospitality Property Fund 3.14 13.33% -2.7%* +216%

SHARE PRICE VALUATIONS AND FUNDAMENTAL FINANCIAL INFORMATION * Latest unaudited six months.

** Latest audited 12 months.

*** Tsogo Sun Hotels was unbundled from Tsogo Sun Gaming in June last year.

**** Tsogo Sun Gaming: without Hotels’ contribution, it would decline 13.9%.

*** Barloworld: includes both continuing and discontinued operations.

SOURCE: Bloomberg and company financial statements as at 10 March 2020.

The outbreak of the coronavirus in

China will probably be the biggest

pull on the local tourism industry

this year. By 11 March, SA’s health

authorities confirmed that 13 people

tested positive for the virus. Seven of

them were part of a tour group which

returned to KwaZulu-Natal from Italy

at the beginning of March.

“2020 is going to be tough,” says

Tshifhiwa Tshivhengwa, CEO of the

Tourism Business Council of SA. He

mentions that the biggest problem is

that China is a “big market” for overseas

tourists. Some 93 171 Chinese tourists

arrived in SA during 2019, according

to Stats SA data. This was 3.9% fewer

than the previous year, the data shows.

In the meantime, companies such

as City Lodge Hotels are gearing up

vigilance for the virus – which had

killed more than 4 000 people by

10 March, according to the World

Health Organization. More than

113 000 people were affected.

“We have a protocol in place for

coronavirus at all of our hotels, firstly

with our staff so that they know how

to safeguard themselves and are

fully informed on the facts of how

to identify the signs of infection,

and preventative measures to avoid

contamination,” says Andrew

Widegger, CEO of City Lodge Hotels.

Going by countries that have had

infections, the impact is quite marked,

but given that City Lodge’s guests are

predominantly local, the company has

less exposure, he says.

Asked whether the virus would

impact their operations and passenger

numbers, Wrenelle Stander, group chief

executive of Comair (which operates

the British Airways franchise in South

Africa and owns kulula.com), says it is

difficult to gauge the impact of the virus.

“That’s very difficult to say at the

moment as it is hard to predict the

extent or duration of the virus and the

impact that it may have on international

travel to destinations other than Asia

and now some parts of Europe.”

Paulette McGhee, CEO of Bidvest

Car Rental, says as the virus spreads,

“with restrictions on global travel and

quarantine protocols, we recognise the

negative impact this will have on all

markets. But our current projections

remain strong and we are monitoring

this on a daily basis.” ■

Coronavirus and the local

travel and tourism industry

The impact of the coronavirus on South Africa’s travel and tourism

industry is still unknown. However, some companies are gearing up for it.

WITH ANDREW WIDEGGER

finweek interviewed City Lodge Hotels’ CEO Andrew

Widegger. He shared his views on the sector and its outlook

for the rest of the year.

Q: How has City Lodge experienced the decline in offshore tourists

(ex-Africa) arriving in South Africa during 2019? Did it impact room

occupancy, and if so, by how much?

A: We did not see a decline in offshore tourists in 2019, in fact,

we saw an increase. Our tourist area is predominantly the

Cape and with the negative effect of Day Zero (the extreme

water restrictions imposed in Cape Town and other towns in

the Western Cape two years ago) behind us, together with the

positive impact of the Barmy Army, our Cape Town and Port

Elizabeth hotels benefitted. The bulk of our portfolio – two-thirds

• is situated inland, traditionally non-tourist areas.

Q: What is the proportion of room occupancy by offshore tourists at

City Lodge?

A: Roughly 30% of our guests are offshore tourists, both business and

leisure.

Q: What is City Lodge’s outlook for offshore tourist arrivals to SA in

2020?

A: Excluding the coronavirus threat on global travel, our

expectations would be for an increase in offshore tourist arrivals.

The weaker rand exchange rate will also assist with this. The

recent lifting of the unabridged birth certificate [requirement for

children entering and leaving SA] and the e-visa pilot in Kenya,

and in time India and China, will also assist in lifting offshore

tourism arrivals numbers generally.

There is also an increased focus by South African Tourism and

our new tourism minister, Mmamoloko Kubayi-Ngubane, on inbound

arrivals and foreign marketing activities, including a video made in

India. Safety does remain a concern and we are pleased with the

joint announcement made by the minister of tourism and minister of

police in December 2019 introducing Tourism Safety Monitors. ■

San Deck at

Sandton Sun in

Johannesburg