Slow first quarter for tourism sector

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FNB Namibia and Fenata have released the first tourism/travel index for 2015 which hints towards lower tourist activity within the country as the index dropped 12.8 percent quarter on quarter.

Daniel Kavishe, market research manager at FNB Namibia Holdings, advised that international passenger arrivals, combined with catering and retail activities at the various hotels and restaurants, dropped during the first quarter. He added that seasonally, the data correlated with the overall nature of tourism flow which dipped during the summer season.

Kavishe said that an opinion survey had been carried out in the industry and results proved that past performance of businesses within the industry showed a substantial decline over the quarter with most managers citing less activity than they anticipated.

“30.1 percent of the respondents cited that they expected a higher influx of customers than was recorded. Revenue during the same period seemed to further decline with 38.9 percent of the respondents stating that sales had dipped as demand tapered. According to the respondents the ripple effects of the Ebola crisis had a negative impact on overall operations since the third quarter of 2014 but there was hope that the numbers would normalize this year,” noted Kavishe.

When looking at employment numbers, Kavishe added that numbers during the interim edged into negative territory indicating that most managers refrained from hiring additional workers but rather opted to keep the same level of employees.

27.8 percent of managers had a smaller workforce compared to the same period last year, largely as a result of higher input costs the businesses faced as a result of rising local prices and a weaker currency.

“Capital expenditure during the past three months declined as local businesses opted to contain their spending while focusing more on the operational portion of business.

“27.8 percent of respondents however indicated that they expected to increase their capex in the second quarter of the year with the hope that this would boost overall sales,” mentioned Kavishe.

The FNB/ Fenata Tourism index further stated that the first quarter was also characterized by Namibians taking advantage of local guest houses and lodges as they constituted 28.8 percent of tourists. This was a reaction to off-peak season discounts that are symptomatic of the first quarter.

9.2 percent of tourists came from South Africa with tourists from the rest of the world representing smaller but significant portions. Amongst the estimated tourist numbers, 24.6 percent of them opted to stay in hotels while 24.4 percent preferred camping.

Considering the second half of the year, Kavishe commented: “Looking into the second quarter of this year, we expect an increase in tourism activity but at a slower growth rate compared to last year. The recently ended tourism expo and the commencement of the hunting season should help to boost numbers. The nationality of the tourists is likely to reflect less tourist movements from the European region according to the latest Euro barometer tourism survey, which showed a meagre 24 percent of respondents that plan to spend their holiday outside Europe.

“Compared to last year this period, managers in the industry have noted certain changes to the usual patterns. Rising international incidences such as terrorist attacks and civil unrest in neighbouring countries have increased the level of uncertainty amongst tourists from outside the continent from making firm commitments to travel. This was witnessed by managers who have noted that interest may have grown to visit the country but fewer bookings have been landed. The managers however also indicated that Namibia has become the destination for several high-end customers, therefore despite the seasonal drop in tourist numbers, certain retailers in the industry (game lodges, B&B) still benefit from upscale tourists,” he concluded.