The air is getting thinner for Kenya’s tourism industry

IMMINENT LAY OFFS IN TOURISM INDUSTRY BLAMED ON GOVERNMENT

(Posted 18th September 2013)

The mood among the tourism sector stakeholders is turning grim and sour as the ill considered introduction of VAT on park and conservancy entrance fees and a range of other services is shattering the industry’s dreams to stem the downturn of the first half of 2013 and reverse the trend. To the contrary are now the first murmurs emerging from Nairobi and Mombasa that layoffs of staff have already commenced as companies are trying to adjust to lower arrival numbers and cut cost to stay in business. While individuals have been quoted in the local daily newspapers in Kenya, none of the more outspoken contributors here cares to see their names published, and the following comments will probably reveal why: ‘This VAT issue is like government shooting themselves in their own foot. That will become a festering wound for us all and the targets they hoped to achieve will by the look of it all but collapse. If Kenya is to achieve double digit growth and tourism is to be the engine of that growth, this government has already suffered one spectacular failure. Kandie [Kenya’s
Cabinet Secretary for East African Affairs, Commerce and Tourism Mrs. Phyllis
Kandie] gave the figures for the last financial year last week and those look grim. How she thinks she can turn this ship around we have no idea. Charters to Mombasa are too few, foreign airlines are not given incentives to fly to the coast on scheduled flights because they need traffic rights for other waypoints. How can Emirates fly twice a day to Mauritius and start using the Airbus A380, how can they fly twice a day to Seychelles and yet they do not fly to Mombasa and for the entire Kenya, much bigger than those islands, they only come twice a day. Something does not fit here between what they say and what reality looks like. First parliament takes nearly 2 billion from our marketing budget to plug holes somewhere else, then Uhuru [Uhuru Kenyatta, Kenya’s
President] goes to the Mara and makes a big announcement that the sector will get 3 billion for marketing but where is that money. If KTB does not have that money they cannot perform to the fullest of their ability. But in any case, they have limitations too. If there are not enough seats to Mombasa, coast tourism will continue to shrink and many jobs will be lost again. I am sure the next thing we hear is that the sector is being blamed but for what. We supported this government and they are letting us down big time. Uhuru was at the tourist board and should know better but it seems they are now both preoccupied with their trials and we are left to hang. They must get their act together fast because even our backbone, domestic tourism, is now declining fast because people have no more disposable income. Inflation because of VAT is running away again, the cost of essentials have sky rocketed and how then can people afford to come to Mombasa or visit the lodges when the entrance fee has also jumped up by 16 percent because of taxes. This government has many good plans but has become their own worst enemy. And let me be clear on something else too, the bloody new constitution is draining us of available resources faster than the taxman can extract their blood money from us. It was a big mistake not to pay attention to what it is going to cost us and if we go broke we have only ourselves to blame; ranted a regular source from Nairobi while a source from Mombasa said: ‘Some hotels in Mombasa already struggle now to pay their staff. Some have piled up utility bills for water and electricity and find it hard to pay suppliers. Those badly affected will either lay off staff or close temporarily. Safari sales are down because of the VAT. It is like the rug is pulled from underneath us now. Less flights, less tourists as it is and those who come find that things have gotten too expensive. So instead of an airsafari they do a road trip and those who can only afford a road safari instead of 3 nights in the parks they do only two or one. Does our minister not realize what is coming our way? It is Mwazo [former highly controversial tourism minister] all over again who last year lived in cuckoo land with his promises and projections and of course we now know that was all rubbish. We need a national tourism dialogue where from Kenya Airways to the safari airlines, the hotels and lodges and the tour operators and travel agents all come together and map out the way forward as we see it and need it and then tell government, not ask them but tell them, what they have to do to rescue the sector or else be responsible for the damage we now take’.

In a related development it was also reliably learned that several hotels with plans to expand and modernize their facilities have deferred such heavy capital expenditure until such time that the trend in tourism arrivals shows upwards again. ‘The absence of boards of parastatals, and I am specifically talking of the new outfit which succeeded the Kenya Tourism Development Corporation, does not permit them to disburse funds to the sector for upgrading for instance of a resort. Borrowing money from the commercial market is simply getting too expensive again and KTDC always had preferential interest rates for the sector. It will be along wait for such money to be given out, they have it but need a board to sanction loans. And the law is apparently being sent back to parliament by Kandie to review difficult sections in it. All I can say, it never rains but pours’ added a third coast based source to the discussion over the past few days.

Kenya as a destination has enormous strengths and unique selling points, combining facilities meeting all budgets of visitors on the safari circuit with equally diverse resorts along Kenya’s famous beaches. The upcoming Magical Kenya Tourism Trade Show in October will no doubt give a clearer picture just how much local inflation and risen prices will affect Kenya’s own desire and ability to travel across the country but for sure have tourism stakeholders from the public and private sector their work cut out for them. Watch this space.