The hospitality industry has warned that official liquidation figures of the economic impact of Covid-19 and lockdown have been described ‘as the tip of the iceberg’, says a report in The Mercury.

Statistics SA recently released its Statistics of Liquidations and Insolvencies report, which shows that the number of liquidations increased by 7.1% in the three months ending February 2021 compared with the same period last year.

A total of 56 companies in the trade, catering and accommodation sector were liquidated in January and February this year.

In a statement, the Federated Hospitality Association of SA said the numbers confirm the ‘economic damage’ of the last few months.

‘Adding further context, Stats SA’s Accommodation and Food & Beverage key findings reports for January 2021 showed a significant decline in total income for tourist accommodation (-72.9%) compared with January 2020. The Food and Beverage sector did not fare much better, with a decline of -36.1% in total income generated in the same period.’

The University of Stellenbosch Business School’s Jason Hamilton, believed that business shutdowns and liquidations would become even more common this year.

He said the Stats SA figures could just be the tip of the iceberg.

‘Because its official stats it means that it captures official process, and as we know in SA and the SME market, and the informal sector specifically, has a lot of trading taking place adding significant value to our GDP which isn’t necessarily captured through the formal system. The question then has to be asked that if we’ve seen an uptick in liquidations in the formal sector, what is happening in the informal sector where we don’t really have our finger on the pulse.’

Full report in The Mercury (subscription needed)