Kenya looks to new markets to boost tourism

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A number of new initiatives are under way to help Kenya achieve its goal of 3m tourists by 2017. In particular, the Kenyan Tourism Board (KTB) is prioritising new markets in Asia and the Middle East to diversify away from its traditional markets in Europe and North America.

Kenya welcomed 1.8m visitors in 2012 and has stated that it hopes to increase that by two thirds to 3m tourists within the next four years. Tourism currently represents around 14% of GDP and employs as much as 12% of the workforce. The sector is also a significant source of foreign exchange, behind only tea and coffee, bringing in $4.7bn in 2011.

The first half of 2013 was a challenging period for the industry, with an easing in arrival numbers of 8.8% for the 12 month period leading up to June 30, in part a result of unrealised fears over potential civil unrest preceding elections, which, in the end, were peaceful.

Growth in new markets

Not unlike several other major African tourism destinations, sharper declines were observed in the number of tourists coming from Kenya’s largest traditional markets of the UK and the US, where economic gloom likely contributed to the fall. Visitors from the UK were down 17% to 170,000 while the number of tourists from the US dropped 9.3% to 116,000.

Declines in these markets have been partially offset by strong growth from countries such as India and China. In fiscal year 2012/13, there were 66,000 tourists from India, representing a 10% increase from a year earlier and putting it in fourth place as a source of visitors. Kenya welcomed 38,000 arrivals from China, up from only a handful just a few years prior. Indeed, the KTB expects tourists from China to reach 100,000 by 2016. The government predicts 10% growth in the overall number of tourists for 2013/14 owing to growth from Asian markets.

Meanwhile, Kenya is also exploring the Middle East as a potentially strong source of tourism revenue. The East African Affairs, Commerce and Tourism Cabinet Secretary Phyllis Kandie expressed hope that Kenya could take advantage of the growing travel consciousness of residents of the Middle East and Gulf states, and the government recently announced a new memorandum of understanding with Kuwait to boost both visitor numbers and investment figures. “Residents of the Middle East and Gulf States are now more travel conscious and we want to take advantage of this to woo high spenders from petro dollar economies,” Kandie told local media.

Kandie, who assumed office earlier this year, announced a “recovery programme” for the sector, including installing new boards for state-run tourism agencies, hastening the implementation of the Tourism Act of 2012 and upgrading key infrastructure, such as the road between Narok and Maasai Mara. Among the aims of the Tourism Act is the establishment of the Tourism Regulatory Authority and the Tourism Research Institute, which is set to encourage the collection of more accurate industry data.

New challenges

In addition to the slowdown in the UK and US markets, Kenya’s tourism sector also faces challenges related to safety concerns in the wake of the attack at Westgate shopping mall. While the attack itself appears to have had a limited impact on overall economic activity, according to Charles Robertson, chief economist at Renaissance Capital in London, Kenya will lose 160m tourism dollars in 2013 as a result of the attack.

Prices are also under pressure, with the sector also exposed to the new 16% VAT, which came into effect in September and is now levied on vacation packages, hotel rooms and park fees.

In October, Fred Kaigua, the CEO of the Kenya Association of Tour Operators, told the local press that contracts already negotiated would have to be re-evaluated in light of the new expense, adding that this was a difficult time for the industry to absorb additional taxes.

“Kenya has not been attractive to tourism in the past three years because of being in the limelight negatively, hence this is not the right time for the exchequer to introduce all manner of taxes to an industry trying to survive,” Kaigua said. Ultimately, while the new levies mean that some package tour operators could face more competition from more accessibly-priced regional suppliers, Kenya’s long-term fundamentals and its efforts to boost visitor numbers from non-traditional markets have helped maintain the sector’s investment attractiveness.

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