• Cape Town's iconic Mount Nelson Hotel says it will let go 154 of its 251 employees.
  • It's also likely to remain shut until at least December, and doesn't expect to return to normal operation until mid way through 2021.
  • It kept on paying its staff 70% of their salaries through lockdown, but says it can no longer afford that.
  • For more articles, go to www.BusinessInsider.co.za.

Cape Town’s iconic Mount Nelson Hotel will likely remain shut for the rest of the year, and is planning on retrenching more than half its staff as bans on international travel starve it of foreign guests.

Business Insider South Africa has seen a letter to employees, dated 29 June, in which the hotel announces that it is considering a formal retrenchment process to let go 154 employees. The hotel currently has 251 staff members.

According to the letter “82% of the hotel's annual guests are foreigners who travel from overseas. Accordingly, its business is reliant on international travel being possible.”

That's not going to happen any time soon. "We anticipate that the tourism industry will not return to previous operating capacity until mid-2021 at the earliest," it says.

The hotel said the retrenchment process was likely to run until the middle of August.

A number of staff members have confirmed to Business Insider that they have been let go.

In the letter, the hotel says it closed its doors on 26 of March. Since then "zero guests have visited or stayed at the hotel".

The Mount Nelson is operated by UK hospitality company Belmond.

Despite not having guests, the hotel continued paying staff salaries at a reduced rate of 70%.

The hotel says this is no longer financially possible as it is “does not foresee that it will return to normal operating levels in the near future.”

“The hotel is unlikely to open in the next five months,” the letter says, indicating that it will remain closed until at least December. “The hotel anticipates that even if it was to reopen, it would only operate at a significantly reduced rate of occupancy.”

The Mount Nelson also considered instituting temporary layoffs, and offering staff their jobs back when international travel resumed. However, it doesn’t expect operating levels to return to normal “in the near future”.

Putting staff on reduced shifts was also considered. “Unfortunately, this will need to be accompanied by big salary cuts as employees will not be scheduled to work regularly or frequently.”

In addition to severance pay, the hotel offered employees access to a counsellor and a financial advisor. It also opened up the use of its computers to employees so that they could print CVs and email job application forms.

The hotel industry has been devastated by the Covid-19 pandemic. In June, the US hotel giant Marriott announced that it will close three of its South African hotels, including the historic Mount Grace in Magaliesburg and the Edward in Durban.

Tsogo Sun said it will take over those hotels, and expects to reopen them within 18 months.

Receive a daily update on your cellphone with all our latest news: click here.

Get the best of our site emailed to you daily: click here.

Also from Business Insider South Africa: