Taxes taking sheen off Kenyan tourism sites, warn players

Tourism players are backing a campaign to reduce value-added tax levied in the industry to bring the country at par with its regional rivals.

Mr Chris Modigell, a project manager and consultant at Leopard Beach Resort & Spa, said the 16 per cent VAT is making Kenyan tourism to lose its edge compared to other countries in the East African Community (EAC).

“If you take the safari sector, for instance, bear in mind that our recent increase in VAT on safaris and park fees have made Kenya a very expensive safari destination compared to our neighbours, Tanzania,” said Mr Modigell who is also a member of the tourism recovery committee representing the South Coast stakeholders.

He was speaking to journalists during a familiarisation tour of the South Coast.

Modigell said in terms of beach products, Kenya’s biggest competitor is Zanzibar, which has an open-sky policy and whose hotels are of better quality.

“Kenya is not a beach destination; we very much depend on safaris. The days when Kenya’s coastal destination accounted for 60 per cent contribution to tourism are gone,” he said, adding that there is a need to reinvent the sector.

He called for “political will” from the government to increase funding for the Kenya Tourism Board (KTB).

KTB managing director Murithi Ndegwa said allocation from the government stands at Sh745 million. The board also gets two per cent of the catering levy collected from hotels.

Speaking at a different event at the Coast, Tourism Cabinet secretary Phyllis Kandie said the EAC is working on harmonising VAT.

“It is the prerogative of the National Treasury to look at taxation. The sector has been complaining about the VAT, saying it has made the (tourism) product uncompetitive. As EAC we are working on harmonising the taxes and our products will be as competitive as they used to be,” said Ms Kandie, adding that the government is keen to provide incentives.

The minister said the government plans to invest in conferencing facilities to boost business tourism, adding that the Bomas of Kenya in Nairobi will soon be revamped to cater for 15,000 delegates.
CONFERENCE TOURISM

“This will give an incentive to the tourism sector to align their products with this strategy and reinvest in their facilities,” she added.

Mr Ndegwa said meetings, incentives, conferencing ,and exhibitions (MICE) tourism will ensure that the sector remains resilient across all seasons.

“This is one of the fastest growing products and it generates quite a lot of revenue. It (MICE) will work in evening out the seasonality in the sector because it is an all-year-round product,” said Mr Muriithi, adding that Kenya is rated second after South Africa in conference tourism.

In a bid to revive tourism, the government also plans to set up a unit within the ministry to regulate the sector by setting standards.

Other challenges that the sector faces in Kenya include the lack of an open-sky policy in the aviation industry. This, Mr Modigell said, should be addressed to open up the Kenyan destination.

“Kenya does not have direct flights from Russia to Mombasa but currently has increased air connections from the Far East, thanks to Kenya Airways,” he said.

Last month the country lost the charter from the Swiss airline, Edelweiss, which was flying directly to Mombasa, adding to the earlier decline of flights from the UK to one, down from seven within a few months.

This is a huge blow to the sector, given that even the source markets lack direct flights to Mombasa. “There are no more direct flights from Europe to Mombasa. We also have no direct flights from Germany, our traditional market, to Mombasa,” added Mr Modigell.

EMERGING MARKETS

He said local tourism needs to focus on the emerging markets and scout for new markets to sustain the sector.

“We should never lose sight of our traditional source markets, but we must also never close our eyes to emerging markets like China, Japan, and Russia,” said Mr Modigell adding that the country has the whole of the Indian market at its disposal.

The recently-constituted tourism recovery committee is tasked with coming up with solutions to help revive the sector and return it to its former glory.