If we want to reverse slump in tourism, we must first fix our security problems
What you need to know:
- A 20 per cent drop in the number of tourists means that 84,000 potential tourists stayed away from Kenya for the last three months of 2013.
- Linkage estimates for the sector have shown that 100 tourists in a Nairobi five-star hotel generate a daily demand for 420kg of vegetables, 151kg of beef and other meat, 158kg of fruits, 50 litres of milk, 257 bottles of non-alcoholic beverages, 10kg of fish, 43kg of poultry, 257 eggs, and 23kg of sugar.
The insecurity that Kenya is currently facing demonstrates that safety, and not our wildlife or beaches, will shape the future of country’s tourism.
The magnitude of economic loss in the tourism sector after recent terrorism attacks is significant.
Three months after the September 2013 Westgate Mall attack, for instance, it is estimated that international tourist numbers declined by 20 per cent.
If every tourist who visits Kenya spends an average of Sh63,000, the direct earnings lost from 84,000 tourists during this period translated to Sh5.3 billion.
This is a conservative figure, considering that there are tourists who enter the country through border entry points instead of major airports.
Tourism is a discretionary product, meaning that you can choose not to go on holiday. This would be especially true if you perceived any kind of security risk, let alone an advisory by your government of “heightened threats from terrorism and high rate of violent crime”.
It is, therefore, important that we look at the whole picture and in particular security and safety within our borders.
While developed countries such as the US and UK have been affected by terrorism, the tourism sector in these countries, unlike Kenya’s, contributes a negligible percentage to their national wealth.
ONE BED SUPPORTS TWO JOBS
Kenya’s tourism accounts for an estimated 10 to 12 per cent in direct and indirect contributions to the economy. Due to Kenya’s low economic diversity, tourism is one of the key sectors with great potential to help the country to achieve the Vision 2030 development agenda.
Studies by the Kenya Institute for Public Policy Research and Analysis (Kippra) show that one hotel bed occupied by a tourist supports two direct jobs.
A 20 per cent drop in the number of tourists means that 84,000 potential tourists stayed away from Kenya for the last three months of 2013. This is equivalent to the closure of three 100 bed-capacity hotels with 600 employees.
Farther down the value chain, suppliers of such hotels, including vegetable farmers, meat suppliers, and manufacturers of beverages and soaps, have nowhere to sell their products.
Linkage estimates for the sector have shown that 100 tourists in a Nairobi five-star hotel generate a daily demand for 420kg of vegetables, 151kg of beef and other meat, 158kg of fruits, 50 litres of milk, 257 bottles of non-alcoholic beverages, 10kg of fish, 43kg of poultry, 257 eggs, and 23kg of sugar.
When the market for these supplies shrinks, this too has implications for jobs and incomes in other sectors. The airlines, taxi cabs, and tour companies experience reduced business too.
Thus, the multiplier effect of reduction in tourist arrivals affects the welfare of the ordinary citizen both directly and indirectly.
PRICE COMPETITION
From another perspective, when tourist numbers decline, the competition among the hospitality businesses left standing for the few tourists available oftentimes sets off a fierce price competition, which is unhealthy for the economy.
It is estimated that a hotel in Kenya requires an occupancy rate of 40 per cent to break even. With falling occupancy levels, hotels end up making losses and tourism investors are unable to make new investments.
Recent research by Kippra shows that Kenya lost an estimated 365,000 tourists to its key competitors between 2007 and 2010.
This is equivalent to Sh22 billion in terms of tourism earnings, with the key beneficiaries being Tanzania, South Africa, Seychelles, and Mauritius.
Further, Kenya’s key tourist source markets of UK, the US, Italy, and Germany recorded a drop in performance in 2013. Overall, between 2011 and 2013, total tourist arrivals declined by 17 per cent.
Whereas the decline in tourist numbers can be attributed to the global financial crisis, other factors include delayed holiday bookings for 2013 due to the uncertainty surrounding the 2013 elections, travel advisories, and insecurity.
In a nutshell, there is a need for concerted efforts by all players in the tourism sector to address the issues affecting it and innovative ways to expand other products such as conference tourism, which have shown resilience even in the face of increasing insecurity.
The writers are researchers at the Institute for Public Policy Research and Analysis (Kippra).
