The hospitality industry is under severe pressure to survive financially, given the decline in occupancy, and the reduction in rates to attract bookings and to conserve cash flow.

The increase in telephone costs, electricity costs, in the price of petrol and diesel, and in the Minimum Wage, combined with the lack of a cut in the interest rate by the Reserve Bank last week, is a severe blow to the industry, but also affects every South African household, the main source of income for the industry.

The worst shock is the increase in the price of electricity by 31 % from 1 July.   The increase is justified on the basis of new electricity infrastructure that is required, to prevent electricity load-shedding, as was experienced in 2007 and 2008.   Eskom had requested a 33 % price increase.

The price of petrol is set to increase by 40 cents a litre from 1 July, raising the price to R 7,90 a litre in Gauteng, reports Reuters.

TELKOM boasts about a minimal rise in its costs to consumers, but has sneakily left out the call cost increases of 11 %.

For hospitality establishments with fewer than 10 employees, the Minimum Wage increases by 11% to R 1 843,23 per month, R 425,43 per week and R 9,45 per hour from 1 July.   The formula for calculating the annual increase has been laid down by the Department of Labour ( consumer price index + 2 %).   Many staff may be prepared to hold their salaries to ensure that they maintain their jobs, but this flexibility is not allowed by the Department, who could not have foreseen the credit crunch when it introduced the Minimum Wage for the hospitality industry in 2007.