Addressing infrastructure challenges in southern Tanzania to drive tourism growth

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A World Bank-funded project to realise the potential of Tanzania’s southern safari circuit, coupled with an influx of high-end hospitality players, looks set to support long-term growth in the tourism industry.

In mid-February Vice-president Samia Suluhu Hassan launched the TSh340bn ($150m) Resilient Natural Resource Management for Tourism and Growth (REGROW) project with the World Bank’s International Development Association to improve conservation management and infrastructure in southern Tanzania.

Slated for completion in September 2023, a key focus of the initiative will be to improve connectivity to the southern safari circuit, a 77,000-sq-km area of game reserves and national parks. Despite its high tourism potential, the region currently attracts only 1% of all tourists to Tanzania due to a lack of transport links such as roads and airstrips, with visitors preferring to visit the country’s well-established northern circuit.

Projects to be carried out under the programme include construction of 15 airstrips at four national parks – the Selous Game Reserve, the Ruaha National Park, the Mikumi National Park and the Udzungwa Mountains National Park – in addition to a new road from Iringa town to the entrance of the Ruaha National Park, according to Hamisi Kigwangalla, minister for natural resources and tourism, who spoke to local press in February.

Visitors to the parks could increase from 98,500 to 135,000 as a result of the programme, according to the World Bank, and provide 5000 tourism jobs.

The recent investments are vital to ensuring Tanzania reaches its tourism potential. While international tourists have increased almost 90% over the past decade – surging by 12.9% to 1.3m in 2016 alone – inadequate infrastructure is still a major barrier for the industry, with poor roads and power shortages adversely affecting the tourist experience, according to PwC’s “African Insights Hotels Outlook: 2017-2021” report.

Receipts up, room revenue growth forecast

While the REGROW project is being externally funded, an increase in tourism-related revenue seen last year could foster greater state investment in the sector going forward. Foreign exchange earnings from travel, of which tourism receipts were the main contributor, increased by 2.6% year-on-year (y-o-y) to hit $2.2m in the January-November period of 2017, according to the Bank of Tanzania. Meanwhile, revenue from the services sector rose by 3.3% y-o-y to $3.7m.

Further positive news came in January, when Kigwangalla announced that the sector had contributed around 25% of the country’s foreign currency in 2017, and that its value added had grown by 12% to TSh4.7trn ($2.1bn).

The hotel industry also remained resilient, with room revenue growing to $224m in 2016, representing a 7.7% increase on 2015, according to PwC. While this was forecast to drop to $216m last year, as a result of the introduction of a value-added tax on tourism services, earnings are expected to reach $240m in 2018 and $371m by 2021.

As per PwC data, this would represent 6.9% compound annual growth between 2017 and 2021. By comparison, the competing markets of Kenya, South Africa and Mauritius are expected to record increases of 7.5%, 9.3% and 6.2%, respectively.

Government efforts to improve connectivity, including airport upgrades, were a key contributor to PwC’s positive outlook for Tanzania.

Based on PwC’s predictions, the number of hotel rooms in Tanzania are also set to expand by 2.5% this year to 8100, and are expected to number 8500 units by 2021.

Tanzania welcomes high-end hospitality brands

Many of these new keys are set to come from the opening of new high-end hotels, with UAE-based Rotana Hotel Management Corporation in the process of constructing its five-star Johari Rotana in Dar es Salaam, which will comprise 256 hotel rooms and suites upon completion later this year.

One project that will add hotel room inventory and permanent residences in the near and medium term is the $1.6bn, 650-ha mixed-use Zanzibar Amber Resort in the north-east of Zanzibar. Being developed by Pennyroyal Gibraltar, the coastal site involves the construction of a deep-water marina, aqua park and golf course.

Phase one of the project was launched in January and consisted of 47 luxury, two-storey villas available for purchase by both locals and foreigners, marking the first time that non-residents have been able to buy property on the island.

Five international hotels are also being built at the site, two of which are being constructed by Thailand’s Anantara and US-based Ritz Carlton.

Expected to open its doors in 2020, the Anantara Zanzibar Resort will have 100 rooms and 50 pool villas, and comprise a spa, gym, three restaurants and a bar. The Ritz Carlton is expected to open a year later and will have 90 rooms and suites.

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