Tourism feels the pinch
Global and local economic factors, coupled with drought, lack of quality staff and service have caused a slight slump in the tourism index.
The tourism industry in Namibia is feeling the impact of the cutbacks made by the government due to the slowing economy.
Most tourism operators in Namibia are feeling the impact of the slowing economy and particularly businesses that rely on government for conferences, seminars or workshops.
This is according to the latest FNB/Fenata Travel Index which says these activities often supply consistent revenue streams, but with government cutting back, several businesses have, and are expected to, experience a slump in operations.
Also, delayed payments from the public sector exerted pressures on business cash flows with government departments failing to meet their financial obligations on time.
According to the report, other challenges that the industry is experiencing include the uncertainty surrounding the New Equitable Economic Empowerment Bill (NEEEB) and the Investment Promotion Act.
Hunting operators are particularly concerned about outdated regulations and the notably long turnaround times to issue new hunting quotas and permits.
According to the report, general staff related problems continue to feature as a major bottleneck in the sector with high staff turnover, inexperienced staff or poor service delivery by staff employed at the various institutions.
“The problem stretches from the point of first contact to management level, where a general lack of competency and customer centricity is eroding the customer experience. Training institutions and schools have been singled out as one of the reasons for the weak customer centricity, as they fail to prepare the graduates for the sector,” says the report.
Furthermore, tighter liquidity within the financial sector and economy at large has made it difficult for some respondents to access finance for construction geared at expanding operations, or for simple renovations.
This has resulted in a general shortage of accommodation capacity, at preferred locations, especially during the peak season.
The report says that other pertinent challenges faced by the industry are poaching, increased crime levels across various establishments and the persistent drought, which has increased the chance of bankruptcy for some operators in the industry.
The report reveals that real growth in the index contracted by 7.5% for the final quarter of 2016. Despite improvements in the bed occupancy levels, load factors remained dire, contracting by 6.7% quarter on quarter.
It says that the increase in flights did not have a corresponding increase in passenger numbers and hence load factors contracted.
Furthermore, the Namibian dollar appreciated during the quarter, hence pushing the index lower, since 54% of the bed nights sold, were sold to non- Common Monetary Area residents and a stronger domestic currency erodes their purchasing power in Namibia.
On an annual basis, the index grew by 1.6%, supported mainly by the growth in the third and second quarter. Nominally, the growth was much higher at 11.3%, with hospitality inflation making up the difference. High food, utilities, fuel and transport costs have pushed up hospitality inflation to 9.6%.
ELLANIE SMIT
Most tourism operators in Namibia are feeling the impact of the slowing economy and particularly businesses that rely on government for conferences, seminars or workshops.
This is according to the latest FNB/Fenata Travel Index which says these activities often supply consistent revenue streams, but with government cutting back, several businesses have, and are expected to, experience a slump in operations.
Also, delayed payments from the public sector exerted pressures on business cash flows with government departments failing to meet their financial obligations on time.
According to the report, other challenges that the industry is experiencing include the uncertainty surrounding the New Equitable Economic Empowerment Bill (NEEEB) and the Investment Promotion Act.
Hunting operators are particularly concerned about outdated regulations and the notably long turnaround times to issue new hunting quotas and permits.
According to the report, general staff related problems continue to feature as a major bottleneck in the sector with high staff turnover, inexperienced staff or poor service delivery by staff employed at the various institutions.
“The problem stretches from the point of first contact to management level, where a general lack of competency and customer centricity is eroding the customer experience. Training institutions and schools have been singled out as one of the reasons for the weak customer centricity, as they fail to prepare the graduates for the sector,” says the report.
Furthermore, tighter liquidity within the financial sector and economy at large has made it difficult for some respondents to access finance for construction geared at expanding operations, or for simple renovations.
This has resulted in a general shortage of accommodation capacity, at preferred locations, especially during the peak season.
The report says that other pertinent challenges faced by the industry are poaching, increased crime levels across various establishments and the persistent drought, which has increased the chance of bankruptcy for some operators in the industry.
The report reveals that real growth in the index contracted by 7.5% for the final quarter of 2016. Despite improvements in the bed occupancy levels, load factors remained dire, contracting by 6.7% quarter on quarter.
It says that the increase in flights did not have a corresponding increase in passenger numbers and hence load factors contracted.
Furthermore, the Namibian dollar appreciated during the quarter, hence pushing the index lower, since 54% of the bed nights sold, were sold to non- Common Monetary Area residents and a stronger domestic currency erodes their purchasing power in Namibia.
On an annual basis, the index grew by 1.6%, supported mainly by the growth in the third and second quarter. Nominally, the growth was much higher at 11.3%, with hospitality inflation making up the difference. High food, utilities, fuel and transport costs have pushed up hospitality inflation to 9.6%.
ELLANIE SMIT
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