TROUBLE IN PARADISE?
(Posted 20th December 2014)
The main engine of Seychelles’ economy, tourism, appears to be stuttering and spluttering right now as the country’s tourism industry is on edge to find out, if at the end of the year another arrival record will have been set or if the record numbers of 2013 will be missed. But even if the numbers in the end do add up, courtesy of the added flights by Air Seychelles to new destinations in Africa, across the Vanilla Islands and to India, courtesy of Emirates going double daily a few weeks ago and courtesy of Mihin Lanka adding a third flight, revenues for 2014 have in tourist per capita expenditure gone down by reportedly at least 5 percent.
Initiated by the Seychelles’ Minister of Tourism and Culture, Alain St. Ange, have over the past several months intense stakeholder consultations taken place, of late including other portfolios with an impact on the tourism industry, to seek a way out of the trend which emerged during the year and devise countermeasures. This dialogue was much welcomed by the archipelago’s main sectoral association, the SHTA, short for Seychelles Hospitality and Tourism Association, which threw their support behind the dialogue and which newly elected Executive played a major role in collecting and formulating stakeholder positions, expectations and hopes.
The just announced government budget for 2015 though seems to have caused some major consternation if not outright upset among the private sector, leading to an almost unprecedented public spat when SHTA went public and called a spade a space, as seen from their perspective.
Several sources on the islands were swift though to rush to the support and defense of their tourism minister, whom they attest genuine desire and a keen interest to not just engage in dialogue but take tourism’s position to cabinet. ‘I think the budget shows that he was not able to get enough support in cabinet to give tourism a better facilitation. Between you and I my personal view is that he has some serious opposition in cabinet among some of his colleagues. Some bear a grudge since his appointment because he does not come from the ruling party LEPEP. Others have issues with him because he made such a success of tourism since he was brought on board in 2008 at the tourism board and then as Minister. Yet others and perhaps some of the same I referred to see their own ambitions threatened and for their own ends throw spanners in his works. Yet, in the process they risk the success of our main pillar of our economy and that is very selfish but that is also politics. I think the SHTA criticism is mainly directed at those I am referring to but whose names I will of course not give and not at the Tourism Minister himself, even so he heads the sector’ communicated a regular source from Mahe, confirming the murmours from the grapevine in recent weeks.
SHTA’s public communique reads as follows:
Start quote:
Seychelles Hospitality and Tourism Association (SHTA) Statement on the 2015 Budget
We must express, on behalf of our members, our overall disappointment with the 2015 Budget which fails to deliver on the fiscal measures necessary to oxygenate the tourism sector.
We have spent an inordinate amount of time over the last six months in discussion with government. The motor of the economy is faltering, we asked for oxygen through fiscal respite. Our request was not irresponsible or extravagant. The figures speak for themselves. A 5 percent decline in tourism earnings, the 14 percent decline in fisheries confirms that Seychelles is too expensive, unproductive, and a hard sell with high rates, high fuel bills, high VAT.
The government’s response has been to slam a struggling private sector with more taxes, which will drive up costs even higher and make it even more difficult to do business in Seychelles. It does not reflect the spirit of collaboration with which we as the private sector engaged with the government in at the four Cross Sectorial Ministerial Meetings and in the various technical working groups. These much publicized Public Private Sector meetings promised much at the outset but delivered nothing in the end. As the SHTA, we feel that the Government has failed the Nation at this critical moment.
The 2015 Budget is lacking in substance, it contains no stimulus to encourage growth of businesses or for the private sector to reinvest to ensure the continuity of their businesses. It glosses over the poor performance of 2014 and promotes business as usual as an ever shaky base crumbles from inside. For our industry in particular it contains nothing material to ease the operational and systemic challenges faced by our distressed operators. With over capacity of bed stock, reduced earnings and low occupancy levels, severe international competition, an intra-country price war, lack of access from our high yield source markets, the government has opted to disregard and ignore the plight of an industry in trouble and the existing operators of 12,000 bed stock and other tourism related operators.
Contrary to the Minister, we must express caution ahead due to disappointing forward bookings and signs of early discounting for the early part of 2015. Due to overcapacity, we expect the intra-country price war to continue, thus driving rates further down. The opening of the Bel Ombre hotel and re-opening of Avani Seychelles Barbarons Resort & Spa will exacerbate the trend. With escalating costs the new taxes will entail, those businesses who are able to will have no option but to cut down on quality and standards just to keep afloat. This budget will make our industry even more uncompetitive and risks rendering it ultimately irrelevant.
End quote
Trouble in paradise it seems with storm clouds gathering on the horizon. Fresh positions are now staked out and perhaps new alliances forged to take the fight for a better and improved policy framework and better sectoral facilitation back to the government.
‘St. Ange has brought a breath of fresh air into the sector from the day he arrived but along the way, envious of his success, the number of political opponents has grown. He has our support but what we need is also the support of other key ministries in our government. Finance has probably yielded to Realpolitik reflecting the overall mood in cabinet or if not the mood then the numbers. Maybe the national assembly will be able to in part reshape the budget and we are working through that channel now’ added another source.
Minister St. Ange has since his ministerial appointment managed to put the global spotlight on the Seychelles. This has seen the island nation regularly quoted and cited for tourism marketing success, conducive policies and bringing tourism and aviation on one table to discuss the future of both, inextricably linked sectors. Next year’s first ever meeting of tourism and transport ministers in a joint UNWTO and ICAO meeting to be held on the main island of Mahe in April ahead of the annual Seychelles Carnival, is manifesting this success perhaps better than any other single event. Yet, as the challenges at home are mounting, there is a greater need than ever before to be unified and work hand in hand at home to maintain the success the archipelago enjoyed abroad.
One source made it clear that SHTA felt it had no choice but to go public the way they did, and understandably so, in the process however also drawing a red line in the sand and declaring readiness to do battle for their sector. Minister St. Ange will no doubt be a valuable ally for them inside government but knowing the complexities of the archipelago’s domestic politics, only time will tell how fast fresh alliances can be forged to accomplish that crucial objective, to facilitate tourism the way it needs to be facilitated in order to build on the success of past years and extend it deeper into the decade.
