Poor tourism results dim economic growth projections for Kenya


(Posted 24th December 2013)

An erstwhile staunch supporter of the present government in Kenya last evening wrote: ‘They are getting what they deserve, they cannot harvest because they did not look after key economic sectors. Now it is becoming clear that the government will fail in their economic growth targets and one of the main reasons is that they messed up tourism with VAT, failure to facilitate KTB, creating uncertainty over KTB’s future and failing to listen to the key stakeholders’ when figures were released from the Kenya National Bureau of Statistics that slowed to 4.4 percent in Q3, a long way off to the projected annual growth figure of 5.6 percent the Kenyatta government had peddled to the public.

Others over the past weeks had already raised the spectrum of coast tourism going into a steep decline, and while the holiday period has recorded strong bookings, forecasts from mid January onwards are described as poor and getting worse as charter companies from Europe have indicated their intention to withdraw from the Mombasa route.

The latest data from the South Coast in fact show, that for the week ending on 22nd December the occupancy levels of All Inclusive Resorts stood at a measly 65 percent in average while full service resorts’ occupancy was even less with just 57 percent, way down from a year ago and even more down compared to the record year of 2011.

From 15th December we should basically be reaching full house but this year this was not the case. By the end of last week occupancies were not too good. Bookings for the Christmas and New Year period will be better but guests from upcountry have also shown a trend of booking for less days than in the past, probably because all the tax increases have cut deep into their available budgets. If government does not reverse some of their negative decisions they took about taxing tourism, that trend for the coast will continue and we will have a very tough 2014 ahead of us. Other segments will also not grow as much as they could because the tourism board does not have the money to blitz the world. The decision to stay away from the Arabian Travel Market shows that the poor facilitation of KTB is costing the country. Uhuru Kenyatta, who was once chairman of KTB, is showing an extraordinarily poor relation to the sector and considering that his family owns resorts at the coast, they are cutting their own legs off. All the hullaballoo of launching new projects will dim when in early 2014 more resorts will have to close and their staff will be laid off. As far as tourism is concerned, their first year in government will be a shamble’ added another outspoken regular source from the Kenya coast.

It will be interesting to see when the KNBS will publish the final statistics of overall economic performance for 2013 and in particular for the tourism industry, as are all eyes also on KTB to publish the latest arrival figures. There some sources in fact claim those data are overdue and being held back, perhaps because they are showing a further decline in tourists coming to Kenya.

For now though, it is Happy Holidays and Seasons Greetings to all my friends in Kenya’s tourism industry, and in a week best wishes for a Happy New Year, though the level of prosperity and growth next year will clearly depend on the reversal of bad government decisions and embracing private sector input to the fullest extend. Watch this space!