CORCORAN: Kenya must save its tourism from a slow death

This article was prompted by a number of meetings I had with various tourism industry players at last month’s ITB fair in Berlin, Germany.

All were with “Africa Specialists” (who produce most of the worthwhile business for Kenya). But the unique thing is that all these contacts had negative, depressing and difficult views to argue.

One agent told me that he used to make seven bookings to Kenya for every one going to Tanzania, but that has since changed to one Kenyan booking for Tanzania’s five and South Africa’s 20. Other operators reported similar trends.

One agent boldly asked me to show him why he should even try to sell Kenya when, in his opinion, there is just too much against us.

This negative image of Kenya as a tourism destination is hinged on the following challenges that directly impact on our attractiveness.

First, Kenya has and continues to face a serious security challenge, ranging from terrorism to violent robbery.

Kenyan authorities have not helped either. In their insatiable thirst for revenue, park fees have risen steeply to $90 (Sh7,740) per person per day even as the quality of products on offer declines.

The Tanzanians have kept theirs at a low of $55 (Sh4,730), making one to wonder what makes Kenya so special as to think of charging nearly double its neighbour’s.

Besides, Kenya is not looking after its main tourism product as is evident from the dramatic increase in poaching, and the disgraceful over-development in the Maasai Mara Game Reserve (arguably our crown jewel).

Add to this the recent decision to charge value added tax on tourism without regard to existing contracts and all the investments made by overseas partners in promotions and brochures and you get how deep we have sunk.

Ultimately, it proved very difficult to persuade anyone in Berlin that Kenya is still a good partner, destination and option for their clients, no matter how hard we tried.

Let me try to expand on each of the points raised above. On security, we Kenyans appreciate that it has been left to us to solve the problem in neighbouring Somalia. But our government’s approach to this task remains wanting. For instance, we are still waiting for answers on the Westgate Shopping Mall terrorist attack, the so-called “light bulb” explosion at Jomo Kenyatta International Airport and a list of others.

This continues to give the impression that one is much safer in Tanzania, Uganda, Ethiopia than they would ever be here.

On park fees, nothing really explains the decision to charge visitors $90 (Sh7,740). It has not been done because of the heightened fight against poaching or increased patrols or to buy new equipment that is needed to protect the wildlife, but simply because “Conservation Fees” now attract VAT. We must be the only country in the world to tax the cost of protecting our own product and heritage.

PRODUCT LINE

Then there is the very important matter of product line. The question is what we will have left in 10 years to attract tourists if we allow destruction of wildlife at the current rate. Game is being decimated by poachers right under the nose of Kenya Wildlife Service.

We have let the local communities run riot in our sacred reserves leading to unsustainable situations such as in the Mara where we have three times the number of properties than there was when the moratorium was imposed.

There are streams of cattle grazing each night in the Mara, pushing the game steadily across the border to Serengeti National Park in Tanzania.

Things are not any better for beach tourism. One cannot take a walk on beaches without being constantly harassed by hawkers and beach boys, leading many to ask what will attract people to our country in 2030. Even where it means well, the government has taken actions that have adversely affected tourism.

Take the imposition of VAT on tourism, for instance. Shouldn’t the authorities have considered partners, who sell Kenya, have printed brochures with specific prices and have existing bookings on their charts? How can we just wake up one morning and say there is VAT starting today.

One particular agent I know who sells packages all over the world has a 168-page brochure and distribution costs of $1 million (Sh86 million) have, for instance, been left in a huge predicament.

He has decided that it is cheaper and easier to leave Kenya out of his plans rather than re-print and re-distribute new brochures because one destination changed prices. So that’s 432 clients and $1.7m (Sh148m) that I have lost for 2014. And I am not the only one.

Secondly, the method of charging VAT remains unclear, six months since it was introduced. Ordinarily, there would have been six months of consultation, then a year’s notice and numerous training seminars on the correct procedures and methods.

All these uncertainties have left us at the mercy of “briefcase” or “fly-by-night” operators who are able to unfairly compete with us using a simple website, good pricing and nothing really behind it. This is because they incur no office costs, no taxes, no staff costs.

Elsewhere in the world, governments protect their good, honest, tax-paying companies from such competitors.

To put it plainly, our main problem lies with the government’s false impression that we are the best, everybody needs us, everybody wants to come here, and we have no competition. They also falsely believe that tourism is a rich industry that is just evading tax. How wrong they are!

Across the industry, DMCs are now down to 11 per cent gross profit margin, which, even keeping costs to bare minimum, translates to less than one per cent net profits in really good times and huge losses in bad times.

This comes from the extremely high costs and stress of doing business in Kenya.

The company I work for, Liberty International, operates in 55 countries giving us the opportunity to compare numbers. Kenya has the highest electricity costs of any office, but we still need a generator due to two or three-day power cuts.

We have the second highest cost of Internet after Cuba and the highest security costs of any office (in terms of alarms and guards) because government machinery has failed.

Our country has the second highest staff insurance costs because the National Hospital Insurance Fund is a flop.

Kenya is one of the few Liberty offices that have private pension schemes because the National Social Security Fund does not function properly. Even that induces a cost of Retirement Benefits Authority to control it.

That is not all, ours is the only office that pays rates and services, but still has to hire a “private” garbage disposal company to do the job.
My appeal to the government is to wake up and save the tourism sector from slow death.

Mr Corcoran is managing director, Liberty Africa Safaris