Bluer skies ahead for SA’s Hospitality sector

Despite local airline capacity constraints, higher international airfares and rising fuel and input costs, there is cause for optimism in South Africa’s hospitality sector.

According to Stats SA data ending July 2022, domestic travel volume increased by 222.8%, while the number of foreign travellers increased by 215.8% compared to July 2021. It must be noted, however, that although international visitor numbers were five times higher year-on-year, arrivals were roughly half of what they were pre-Covid in 2019.

Although earnings are yet to match 2019 levels, the data is pointing in the right direction – and as the recovery of the sector continues, we are proud to have stood by our clients in navigating the challenges of the pandemic.

Here’s how we will continue to support the hospitality sector into 2023 and beyond:

Restructuring of portfolios and debt

In the normalisation period following the pandemic, we expect to see increased activity when it comes to consolidation and acquisition as industry players look to stabilise and/or extend their portfolios.

This is where our M&A team adds significant value, by keeping an ear to the ground and taking a proactive approach in scouting out attractive opportunities for clients interested in acquiring or unbundling assets.

In the post-pandemic environment, debt restructuring is also a key focus area as hospitality groups look to rebalance assets and invest in refurbishment. Hedging is also becoming a hot topic in our current environment of rising interest rates.

Reimagining customer experience

We are also seeing significant attention and investment being channelled into the enhancement of customer experience. Digital innovations mean patrons can now enjoy a streamlined stay via apps that power loyalty programmes, provide contactless check-ins, showcase amenities, enable seamless access to concierge and in-room services, and provide digital wallet capabilities to pay for meals, entertainment and gaming.

This harnessing of technology is delivering further dividends through the ability to collect and analyse data to better understand changing consumer preferences and respond with personalised automated marketing, incentives and rewards.

Increasingly, hospitality groups are also reimagining the overall value they offer visitors by augmenting hotel stays with a selection of carefully curated, authentic local experiences to rival disruptors such as Airbnb. In the short and medium term, repositioning efforts such as these may prove to be essential in the face of the dramatic drop-off in business travel, and the rising costs of international airfares.

Delivering world-class banking solutions and transparency

When it comes to improving back-office efficiencies, our new TreasuryOnline solution enables clients operating various entities across multiple jurisdictions to gain an instant view of their cash position within one secure platform. This solution streamlines financial management by eliminating the need for manual reconciliations and provides tools to manage forex requirements.

Bespoke solutions for the gaming industry

Meanwhile, our innovative new card solution enables our Gaming industry clients to streamline operations and enhance customer experience by reducing the need for multiple transactions.

This system enables cashiers to place a temporary credit hold on funds as per the amount requested by a player, and only once final reconciliation has taken place after players have ‘cashed out’ will the customer’s card be charged. This eliminates the need for initial debit transactions and subsequent refund transactions which can take up to seven days to reflect in players’ bank accounts.

Investing in power security

The coming year will also see an uptick in renewable energy investments following South Africa’s Government announcement in July 2022 that eliminated the embedded generation licensing threshold making it possible for businesses to make investments into uncapped alternative energy production. The government has also introduced tax incentives for businesses and households to encourage them to invest in renewables and reduce pressure on the electricity grid.

This initiative, one of many intended to reduce the load on South Africa’s hard-pressed energy grid, also paves the way for large-scale energy consumers to leverage renewable energy to lower electricity costs and lessen their carbon tax burden once it comes into full force in the years ahead.

Our first-of-its-kind PowerPulse platform helps businesses navigate the complex world of commercial solar PV installations with an end-to-end legal, technical and funding solution.

Sustainability-linked financing

In the hospitality sector, sustainability is no longer a ‘nice-to-have’ to appeal to the environmentally conscious traveller. When considering the water crises in various parts of South Africa, sustainability concerns are now a business imperative.

Our Environmental, Social and Governance (ESG) linked financing enables us to partner with our clients in championing sustainability and responsible gaming targets.

Taking care of employees

In 2020, South Africa’s tourism sector nosedived – declining from 6,9% in contribution to GDP in 2019, to just 3,7% according to Stats SA. In the same timeframe, employment in the sector dropped from 1,5 million to 987,000. Understandably, emerging from the strain of the pandemic, employee wellness is another key focus area in the sector.

We support our clients in this regard by providing them with solutions to support their employees in turn.

Our Employer Value Banking proposition enables you to demonstrate that you care about your staff’s financial wellness by bringing banking services and consultants to them, while our new

BeWell solution enables you to provide affordable primary healthcare services at a level that many individuals may not have previously had access to.

Interested in learning more?

If you’d like to find out more about how we may assist your organisation to achieve its ambitions, please get in touch  to begin the conversation.