Tourism needs quick fixes
While the tourism sector has performed well, a number of tweaks in how we market ourselves, along with upping skills in the sector, would go a long way to making the numbers even better.
Although the tourism sector performed well in the third quarter of last year, undeniable challenges exist within the industry that cannot be overlooked.
According to FNB analyst Josephat Nambashu, tourism businesses therefore need to be ready and flexible to adapt to industry changes.
Nambashu said that if any other developments are excluded there remains two areas that can act as 'quick fixes' to the challenges in the industry.
He said that firstly, the international marketing of the country needs to be boosted as a niche tourism destination to the rest of the world. Secondly, alternative streams of revenue are needed as government consolidation erodes the revenue base of several accommodation sites and conference facilities. According to Nambashu, major challenges in the industry include the general economic slowdown, coupled with lack of quality accommodation, and crime.
“While only a few businesses pointed to waning government support for business events bids, a significant number highlighted crime-related incidents and a lack of exhibition facilities as key areas of concern. Many businesses also feel that tourism demand will be dampened by the impact of the government's policies to cut expenditure in the short- to medium-term.”
Lastly, skilled labour remained an impediment to businesses, with 26% of businesses citing this as a key challenge.
In addition to the top issues surveyed, other business challenges named by respondents included consumer confidence, aviation access, utility costs, dilapidated road infrastructure, and the general slowdown in the business levels from the corporate sector and individuals.
The FNB/FENATA Travel Index, released yesterday, indicates that during the third quarter of 2017, it contracted by 5.7% in real terms.
This decrease, however, was an improvement from -20.0% and -16.2% recorded in the previous two quarters as the industry enjoyed its peak season, underpinned by strong increase in tourist numbers and higher seasonal demand.
Nambashu further explained that the increase in tourist numbers was further pronounced in bed occupancy rates during the third quarter. The average bed occupancy rate for the quarter was at an all-time high and 2.7% higher when compared to the corresponding average rate registered during the corresponding period a year earlier.
He said the local currency recovered some lost ground through the third quarter and therefore trips from America and Europe were only 3.4% more expensive compared to the same period in 2016 due to foreign currency translation.
Financially, 66% of the tourist vendors surveyed saw an increase in revenue during the past quarter and an optimistic 47% anticipate increases in the subsequent quarter.
On staff related matters, some 45% say they had kept their staff capacity unchanged over the last quarter and a similar level increased their workforce. However, future employment prospects remained worrisome, with nearly 56% of the respondents expecting no change in their staff capacity over the next three months.
According to Nambashu, price increases are the answer to combat inflation and the ever-increasing operational costs for 74% respondents, but how such increases will affect the ability to compete in the long run is a worry for some.
As operating expenses increase, most businesses recover increased costs by increasing their menu prices. However, many businesses fear that rising prices will make their goods and services uncompetitive on a global scale.
The industry remained optimistic about the quarter ahead with 75% of respondents confident about their business, echoing relatively strong year ending results. Operators and lodge owners are the most optimistic sectors with 74% expecting to build on growth in the last quarter of 2017.
ELLANIE SMIT
According to FNB analyst Josephat Nambashu, tourism businesses therefore need to be ready and flexible to adapt to industry changes.
Nambashu said that if any other developments are excluded there remains two areas that can act as 'quick fixes' to the challenges in the industry.
He said that firstly, the international marketing of the country needs to be boosted as a niche tourism destination to the rest of the world. Secondly, alternative streams of revenue are needed as government consolidation erodes the revenue base of several accommodation sites and conference facilities. According to Nambashu, major challenges in the industry include the general economic slowdown, coupled with lack of quality accommodation, and crime.
“While only a few businesses pointed to waning government support for business events bids, a significant number highlighted crime-related incidents and a lack of exhibition facilities as key areas of concern. Many businesses also feel that tourism demand will be dampened by the impact of the government's policies to cut expenditure in the short- to medium-term.”
Lastly, skilled labour remained an impediment to businesses, with 26% of businesses citing this as a key challenge.
In addition to the top issues surveyed, other business challenges named by respondents included consumer confidence, aviation access, utility costs, dilapidated road infrastructure, and the general slowdown in the business levels from the corporate sector and individuals.
The FNB/FENATA Travel Index, released yesterday, indicates that during the third quarter of 2017, it contracted by 5.7% in real terms.
This decrease, however, was an improvement from -20.0% and -16.2% recorded in the previous two quarters as the industry enjoyed its peak season, underpinned by strong increase in tourist numbers and higher seasonal demand.
Nambashu further explained that the increase in tourist numbers was further pronounced in bed occupancy rates during the third quarter. The average bed occupancy rate for the quarter was at an all-time high and 2.7% higher when compared to the corresponding average rate registered during the corresponding period a year earlier.
He said the local currency recovered some lost ground through the third quarter and therefore trips from America and Europe were only 3.4% more expensive compared to the same period in 2016 due to foreign currency translation.
Financially, 66% of the tourist vendors surveyed saw an increase in revenue during the past quarter and an optimistic 47% anticipate increases in the subsequent quarter.
On staff related matters, some 45% say they had kept their staff capacity unchanged over the last quarter and a similar level increased their workforce. However, future employment prospects remained worrisome, with nearly 56% of the respondents expecting no change in their staff capacity over the next three months.
According to Nambashu, price increases are the answer to combat inflation and the ever-increasing operational costs for 74% respondents, but how such increases will affect the ability to compete in the long run is a worry for some.
As operating expenses increase, most businesses recover increased costs by increasing their menu prices. However, many businesses fear that rising prices will make their goods and services uncompetitive on a global scale.
The industry remained optimistic about the quarter ahead with 75% of respondents confident about their business, echoing relatively strong year ending results. Operators and lodge owners are the most optimistic sectors with 74% expecting to build on growth in the last quarter of 2017.
ELLANIE SMIT
Comments
Namibian Sun
No comments have been left on this article