Tourism on journey to recovery

The tourism sector, traditionally one of the biggest job-growth drivers in Namibia, is navigating its path to recovery with tourist inflows showing promise and set for further growth in 2023.In the first two months of 2023, there was an average of 11 431 foreign arrivals per month, which is a significant increase compared to the average of 5 223 during the same period in 2022, Simonis Storm (SS) commented on the latest figures of the Hospitality Association of Namibia (HAN). Over the past 12 months, foreign arrivals have reached about 82% of pre-pandemic levels, indicating that the majority of the recovery has been achieved. Meanwhile, regional arrivals have reached approximately 79% of pre-pandemic levels, SS said.“After two years of uncertainty and on-and-off lockdowns, both locally and internationally, the tourism sector is now firmly on the road of recovery,” Cirrus Capital said in its economic outlook for 2023.SS pointed out that 2023 is the first year that Namibia has no variant of Covid at the start of the year and the analysts expect tourist inflows to normalise back to pre-pandemic levels.According to Cirrus: “While some of the structural damage to the supply side of the industry will take some more time to be undone, occupancy and bed/room nights sold are recovering well – with similar levels to 2019 expected to be hit by 2024.”Fiscal boostFinance minister Iipumbu Shiimi allocated N$595 million to the ministry of environment and tourism (MTEF) in the 2023/24 national budget. This will be used to implement six plans, among others.These plans include: tourism growth development and gaming regulations (N$23.6 million); protection and management of key species and natural habitats (N$29 million); infrastructure and development, maintenance, monitoring and evaluation (N$61.7 million); policy supervision and support services (N$102 million); environment and natural resources protection (N$154.8 million); as well as wildlife and protected area management (N$224.4 million).“These government led initiatives should complement private sector projects and strategies to market Namibia as a safe destination with untouched natural environments,” SS said. “In addition, the MEFT announced that they will be conducting research to publish their 6th edition Satellite Accounts report, which will detail the direct and indirect contribution of the local tourism sector to the Namibian economy. This will be a welcome initiative given that the 5th edition was launched in 2015,” SS added.Global outlookAccording to the United Nations World Tourism Organisation&#039;s (UNWTO) report in January 2023, Europe and the Middle East were expected to see a return to pre-pandemic levels of tourist arrivals, while the rest of the world was showing promising signs of further recovery following the progress seen in 2022. The report also stated that there was pent-up demand for travel, particularly from Asia and the Pacific, as destinations and markets opened up. UNWTO data indicated that over 900 million international tourist arrivals were recorded, which is double the number in 2021.The UNWTO suggested that tourists will increasingly look for value for money and opt for domestic travel due to the challenging economic climate, SS said. “We believe that there are potential risks to tourist flows due to economic uncertainty and geopolitical tensions, which may impact international travel in the first half of 2023. As of mid-March 2023, the All-World Travel Index has decreased by 3.7% year-to-date and 1.1% year-on-year. Additionally, the UNWTO Confidence Index shows cautious optimism for the period from January 2023 to April 2023,” they said.Foreign tourist operators indicate that there is high demand for travel to Namibia and that Namibian travel packages are gaining traction, SS added.“With the completion of the American Embassy in Windhoek on the horizon, we anticipate a rise in international visitor arrivals, which presents an opportunity for the country&#039;s tourism sector to capitalise on the ensuing tourist peak season,” according to the analysts.Structural damageThe tourism sector has witnessed a reduction in the number of available establishments due to the impact of the pandemic, leading to a consistent decline in the national bed nights available. This has resulted in a positive impact on occupancy rates, Cirrus said.“Establishments are only now seeing some positive net cash flow, with profits likely servicing debts accumulated during the peak of the lockdowns/pandemic. We expect that lower supply levels will persist through 2023 and gradually improve,” they added.As of mid-2022, the national rental vehicle fleet was at around 50% of pre-pandemic levels, with rental agencies facing challenges in rebuilding their fleet to meet the increased demand due to persistent vehicle supply issues, Cirrus commented.In response to this, the industry diversified in 2022, moving away from the usual car makes such as Toyota. Some agencies even purchased and rented out slightly older second-hand cars as delivery times continued to exceed expectations, according to them.Despite the high demand for rental cars, group travel has slowly started to recover by the end of 2022 and is expected to continue to improve in 2023, they said. According to Cirrus, industry experts suggest that the national fleet size is gradually recovering, but it is only expected to return to pre-Covid levels (approximately 8 000 rental cars) by late 2024 or early 2025.Exchange rate, marketingWith the weaker Namibian dollar benefiting the spending power of tourists, SS expects continued improvements in tourist inflows.Unsurprisingly, there is a clear correlation between the exchange rate and international arrivals. Comparing the exchange rate between the euro and the Namibian dollar to the number of international arrivals in Namibia, one can see the lagged correlation, Cirrus said. “Applying a two-year lag to international arrivals, it becomes clear that arrivals increase after a depreciation in the exchange rate between the euro and the Namibian dollar – as travelling becomes relatively cheaper for international tourists who typically book well ahead of time,” they pointed out.According to SS, the Namibia Tourism Board (NTB) will likely not be able to do much marketing activity in 2023 as it still has limited funding from government’s budget.“Marketing initiatives will therefore have to come from the private sector in order to advertise Namibia as a welcoming and safe tourist destination to boost tourist inflows going forward,” SS said.ChallengesCirrus emphasised that there were several challenges to the pace of recovery of Namibia’s tourism sector, notwithstanding the supply-side destruction and rental vehicle shortfall.“Namibia’s tourism is heavily dependent on visitors from (western) Europe and North America (USA). These countries have been impacted by high inflation rates, the energy crisis, general economic slowdowns and higher interest rates. This may slow the extent of recovery, as disposable incomes for individuals in Namibia’s source markets may become further constrained – seeing international travel discarded,” they said.Industry experts have indicated that the middle-income market, which is expected to be the most impacted by economic downturn, comprises approximately 70% of tourist numbers and generates about 60% of revenue for the Namibian tourism sector, the analysts said. On the other hand, the upper-income market, which accounts for 30% of tourists and 40% of revenue, is likely to be less affected by economic crises.A bottleneck in the industry remains air travel and car rentals, where limited supply is driving up prices, Cirrus added. “Since the pandemic, tourists seem to prefer to book flights and a car before any accommodation, and if those two are either too expensive or in low supply, it will have a negative impact on the recovery in the sector.”

Tourism on journey to recovery

Kommentaar

Republikein 2025-04-30

Meld asseblief aan om kommentaar te lewer

Tourism on journey to recovery

Kommentaar

Republikein 2025-04-30

Meld asseblief aan om kommentaar te lewer

MELD AAN

Advertensie