The great tourism conundrum

Source: The great tourism conundrum | The Sunday Mail Jul 3, 2016

CONCERNS over the competitiveness of local tourism products continue after statistics from the Zimbabwe Tourism Authority showed hotel occupancies dropped last year despite a 9 percent jump in arrivals.Occupancies in Harare fell to 57 percent in 2015 from 59 percent a year earlier, while in Bulawayo figures tumbled to 44 percent from 37 percent.

The trend has spilled into 2016.

During the first three months of the year, occupancies in Kariba have slumped to 24 percent from 43 percent in the same period a year ago. Similarly, Mutare and Vumba were down to 31 percent from 38 percent in the review period. Nyanga tanked 2 percent.

Last year, the country hosted 2,1 million tourists, representing a nine percent jump from the 1,9 million visitors recorded in 2014. Mainland Africa contributed 86 percent of the tourists while overseas markets accounted for the remainder.

In 2015, the tourism sector contributed over 10 percent to GDP and is expected to reach 12 percent by end of year. Tourism receipts recorded a marginal 7 percent rise from US$827 million in 2014 to US$886 million last year.

ZTA head of corporate affairs Mr Sugar Chagonda said hotel occupancies had failed to grow in tandem with the marginal growth in visitors.

“This general drop in average hotel room occupancy levels can be attributed to the harsh economic environment prevailing in the country (which) has seen a decline in meetings, workshops and conferences which usually draw much domestic business.

“Thus, this harsh environment has adversely affected the activities of both corporates and individuals in tourism. In Victoria Falls, the negative growth in the first quarter of 2016 was a result of reduced consumption of accommodation by foreign tourists. Research has shown that most tourists coming into the resort town are resorting to single-night stays or day trips, while they put up in neighbouring countries which are considered reasonable in terms of pricing of accommodation and services.”

Abortive investments by African Sun and the Rainbow Tourism Group in the border town of Beitbridge — said to be the busiest port of entry in Southern Africa — are an indication of the desperate state of the hospitality sector.

African Sun shut its Beitbridge Express Hotel on January 31, 2016 citing recurrent losses amounting to US$271 910 for the year to December 31, 2015, while the accumulated losses for the past two years were US$507 944.

RTG closed the 141-room Rainbow Beitbridge Hotel on May 31, 2016 after posting a US$2 million loss since January 2014 due to depressed occupancies. RTG said the exit from Beitbridge was taken after “strong indications that the hotel will continue to make losses into the foreseeable future”.

Last week, Hospitality Association of Zimbabwe president Mr Fungai Mutseyekwa said even though hospitality outperformed other economic sectors, tourism had “not been performing optimally”.

“Zimbabwe as a destination is proving to be relatively more expensive than neighbouring countries because of the use of the US dollar which has been strengthening against other currencies in use in the aforementioned countries.

“Locally, there is a marked reduction in Government expenditure and industry has taken the cue from them. The economic environment is forcing organisations to be more frugal,” said Mr Mutseyekwa.

Estimates suggest that between 60 to 70 percent of international tourists come through South Africa. The unavailability of cheap money for refurbishment and expansion is regarded as a long-standing challenge in the sector.

Added Mr Mutseyekwa: “Other challenges include high production costs and a plethora of levies, taxes and licences to be paid to various authorities. We continue to engage positively with suppliers, arms of Government and other necessary stakeholders to establish common ground and win-win solutions.”

The hospitality industry continues to engage Government to reverse the 15 percent Value Added Tax on foreign tourists’ accommodation.

There are indications Government will not readily scrap the tax, which has contributed more than US$1,6 million to Treasury in 2016. Revenue authority Zimra also wants the tax to stay.

In Tanzania, the tax is 18 percent — the highest in the region — while Seychelles and Mauritius both charge 15 percent. South Africa charges 14 percent and the tax in Botswana is 12 percent.

Zambia does not have a levy on tourists’ accommodation.

Meanwhile, Mr Chagonda said the number of roadblocks on major highways had “tarnished Brand Zimbabwe” as tourists were “harassed by police”.

On Wednesday, there were more than 50 roadblocks on the 881km stretch from Harare to Victoria Falls.