Tourism increases may not be permanent

10 February 2017
Author   Jackie Asheeke
In the midst of Government budget cuts, drought and an increase in the number of poaching cases before the courts, the tourists are continuing to enjoy their holidays in Namibia. 
The recently released FNB/Federation of Namibian Tourism Associations (FENATA) Travel Index, the Ministry of Environment and Tourism (MET) annual statistical reports of 2014 and 2015, and the private sector tourism associations’ figures, agree that the tourism sector is doing well and in these tough economic times, this is good news. 
However, a probe of the statistical documentation about the sector implies that the current abundance is largely due to external factors, outside of the control of Namibia, rather than something specifically done by the country - in terms of tourism product development, marketing, regulations etc.
A significant factor spurring the current increase in tourist arrivals and receipts is the favourable exchange rate of the South African rand (to which the Namibia dollar is pegged), against the euro and US dollar.  The FNB/FENATA report echoes this analysis.
In 2013, Namibia’s arrivals were 1.2 million with the exchange rate increasing favourably to western travellers at 9.2 ZAR for US$1. 
As the arrivals significantly increased to 1.3 million in 2014, the exchange rate peaked at nearly 12 ZAR to US$1 that same year.
 In 2015, almost 15 ZAR were purchased with only US$1, and the tourist arrivals increased to 1.4 million.
These exchange rates are largely set due to international considerations, South African monetary policy and other aspects outside of Namibia’s control. 
A World Travel and Tourism Council (WTTC) report (2012) notes that tourists choose holiday destinations based on security, customer service, availability of facilities at the prices they wish to pay and travel convenience (for example, they prefer direct flights to multiple layovers and long waits in transit).
It can be justifiably concluded that even if exchange rates from hard currency countries make travel to Namibia ‘cheap’, mainstream tourists will not travel to a place where they think they will be robbed, raped or killed.
They will usually not travel to war zones or drug cartel neighbourhoods either, regardless of the low cost of room rates, well-trained tour guides or excellent food in restaurants. 
So, exchange rates alone do not solely determine increases/decreases in arrivals, but they tip the scales significantly when potential travellers are choosing their travel destinations given the WTTC conditions as noted above are satisfied.
MET’s 2013 tourism arrivals survey stated that leisure tourists coming to Namibia stayed on average nine days and spent N$1,800 per day (not including their transportation costs to get here).  Mostly they are aged between 25 and 65 and travel without their children. 
The FNB/FENATA report and other documents are clear that the vast majority of the tourism arrivals to Namibia are from the SADC region, with South Africa and Angola combining to account for a whopping two-thirds of all 1,3 million tourist arrivals in 2015. 
The rates of SADC arrivals to Namibia are not largely influenced by the exchange rate vis-à-vis the Euro or US dollar.  But, most of those who arrive from South Africa or Angola are usually visiting friends and relatives and/or camping (thus not utilising higher priced formal accommodation).
Our Angolan and South African guests are using primarily self-catering B&Bs and are repeat visitors who do not utilise tour guides and do not buy tourism-related products as souvenirs. They also do not undertake tourism activities like safari drives, ballooning, dolphin cruises or dune boarding. 
It is interesting to note that Angolan arrivals are significantly down (396,828 in 2015 from 519,191 in 2011), due to their failing economy, which was far too dependent on oil, to the detriment of development of other sectors, while arrivals from South Africa are up (213,767 in 2011 to 390,850 in 2015). 
According to the MET 2015 tourism statistics report, overseas leisure tourism arrivals from German-speaking Europe (Germany, Switzerland and Austria), the United States, Italy, France, the Netherlands, China (yes, China) and United Kingdom and other European nations, which make up about 1/3 of all arrivals, were on the rise. 
While taking note that the analysis in the FNB/FENATA statistics report is based largely on the perceptions of those responding to their survey, and not necessarily on actual national data, the report’s highlights are valuable in analysing a profitable way forward for the hospitality sector.  The current data that confirms the increased popularity of tourism to Namibia is highly welcomed and celebrated.
The highlights include that, “tourism profitability, as measured through the FNB/FENATA index, is up 3,4 percent in 2016 from -2,1 percent in 2015”, and that customer service and increased funding for marketing could increase the profitability of the sector.
The latter points about Namibia’s challenges with customer care, training of staff and successful targeted marketing campaigns are all well-known and oft-repeated points about the downside of the tourism sector, as noted by the several WTTC, Namibia Tourism Board (NTB) Tourism Satellite Account reports and MET analysis since 2004.
Consideration that the FNB/FENATA survey conclusions, along with the other data and analysis available, reflect a temporary ‘high’ in the sector, rather than a permanent upward adjustment of the arrivals and increased tourism revenues, must be noted.
The private sector could be correct in increasing employment and capital investment for expansion, using the windfall profits currently available. 
This largely exchange rate-fuelled tourism increase may not be permanent, but may last long enough to ensure a lucrative peak season in 2017 and possibly in 2018. 
There should be a tourism rush in the sector to make as much as possible, as quickly as possible, and then use the profits to reduce debt, off-take profits, increase aggressive marketing and/or finance viable expansion, based on revenues from average occupancies over the last five to 10 years, and not just the last few years of the ‘cheap’ South African rand. 
Conditions outside of Namibia’s control which affect the South African Rand can swing one way or the other and trends must be carefully watched to better predict the situation.
All too often people who usually live in low rainfall conditions, somehow convince themselves that after two to three years of great rainfall, the previous 20 to 30 years of low rainfall and drought didn’t really happen. 
They load up on cattle and small stock and plant flora that require regular watering, as if the succulents and other desert plants that grow indigenously are a fluke.  This conservation-based simplistic example can apply as a caution to the tourism sector. 
Increased permanent employment and credit-financed long-term expansion/purchasing must be done carefully, looking at the overall picture and trends and not just the last few years of increases in occupancy levels. 
The FNB/FENATA survey says that occupancy was up 10.4 percent, quarter-on-quarter in the third quarter of 2016.  The Minister of Environment and Tourism, Pohamba Shifeta said, “It is therefore important that in terms of tourism growth that contributes to the gross domestic product, we aggressively market destination Namibia for holiday and leisure travellers.”
With the NTB budget cut across-the-board by 20 percent, cuts in NTB’s overseas marketing agencies, as well as the disappearance of N$24 million of potential marketing funds, spent on a Kora Awards event that never happened, and with the NTB struggling for various reasons to pay salaries on time at the end of January, it is unclear how the needed “aggressive marketing”, called for by the minister and noted in the FNB/FENATA report, can actually happen. 
This is despite all available experts, industry participants, and the MET itself, agreeing that such aggressive marketing is needed to increase arrivals, in order to try to build on the exchange rate benefits that the industry is now experiencing.


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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