Mass retrenchments have swept through the outbound travel industry, reducing it to an estimated 30-50% of its original (January) staff complement. Industry leaders share their views on how such a dramatic reduction in skilled employees will affect the operating landscape.
Founder and ceo of Travelstart, Stephan Ekbergh, told Travel News that he estimated that at least 50% of the industry’s jobs were already gone for good.
“The pandemic has fast-tracked what was going to happen in the industry over the next years in terms of automation. While many tourism jobs – such as front line hotel, game lodge and restaurant jobs will return – I believe the majority of the job cuts in agencies and tour operators are gone for good. 70% of Travelstart and SafariNow staff have been retrenched with a further 50% of jobs cut at Club Travel. While approximately 20% of staff may be rehired when the industry picks up again, the remainder are probably gone for good,” said Stephan.
Otto de Vries, ceo of Asata, agreed that automation was being fast-tracked in the industry, particularly in the corporate space.
“As the majority of outbound travel spend has always come from the corporate sector, there is a real risk that these jobs will not return unless the agents are able to carve out a unique value proposition for themselves. Small businesses, without the reserves to weather this period, are at high risk of closing down,” said Otto.
“Due to the high level of uncertainty around the industry’s reopening, companies have had to protect their businesses by setting up the longest possible “financial runway” to see them through this period. This has meant moving forward with substantial job cuts. The longer the industry remains closed, the larger the bloodbath in terms of jobs will be,” said FCTG md MEA Andrew Stark.
Andrew estimates the industry will reopen with half the staff complement. He adds that he believes only 50% of suppliers will survive. He expects only 50% of clients to have the means to continue travelling.
“It is estimated that 3m South Africans have lost their jobs since lockdown began. As we only had about 6m income tax payers to begin with, there has been an enormous reduction in individuals with the means to travel,” he said.
Andrew added that the current situation would have to change drastically before the industry was in a position to rehire. He feels that companies that were temporarily retrenching their employees were in many cases giving them false hope about the severity of the situation.
Ceo of eTravel, Garth Wolff, said the job cuts across the industry were driving skilled employees to open their own businesses. He adds that eTravel has never been busier in terms of signing up new ITCs.
Garth estimates that 50% of the industry’s formal jobs had been lost. While he believes that approximately 30% will be soaked back into the industry next year, 20% of jobs have been lost for good.
“It is devastating to see such irreplaceable knowledge – which has taken years to accrue - being lost to the industry. That said, the industry is resilient and we will eventually bounce back. Automation, particularly in the domestic sphere, will play a bigger part going forward, clients will continue to default to a consultant’s knowledge for multi-sector tickets. Rehiring will take, place but at a slower pace,” said independent consultant, Allan Lunz. “The entire industry is in pain at the moment and while casualties are happening, the smaller owner-managers who are on top of their businesses, have had an advantage - to react faster in cutting expenses than many of the larger companies,’ added Allan.
Gm of Travel Counsellors South Africa, Mladen Lukic, is extremely concerned about the quality of skill-sets that have already been lost to the industry.
“Staffing is one of the highest components of a travel agency’s costs and the current job cuts are a direct result of businesses, unable to earn income, trying to survive this period. In the travel industry our staff are also our assets and if we don’t look after them there will be no industry to return to,” he cautioned.
He added that the department of tourism’s recovery plan had set out three different scenarios for reopening the industry, which would all have drastically different long-term consequences on jobs in the industry and the scope of this would be difficult to predict until restrictions started to ease.
According to Mladen the high level of distress in the industry was resulting in consolidation as well as growth in ITCs and ITC solution facilitators. Many competitors and suppliers, without the capacity to whether this period, were already exiting the industry, he added.
