Tourism feels the brunt of budget cuts

Ellanie Smit - Although the tourism industry performed extremely well last year, the sector did not escape governments’ cash crunch unscathed.

Challenges experienced in the sector included neglected maintenance of infrastructure, limited funding for marketing, a decrease in domestic tourism, as well as a lack of resources for wildlife crime and human and wildlife conflict.

CEO of the Hospitality Association of Namibia (HAN), Gitta Paetzold, says the tourism industry once again performed well last year, however the tight economic situation in Namibia and Southern Africa as a whole did not by unnoticed.

“As such we saw a decline in room/bed occupancies from Namibians last year by about 4% when compared to 2016.”

According to her Namibians made up over 32% of all room/bed occupancies in the country’s establishments during 2016, while last year this dropped to just over 28%.

She further elaborated that the hotel and conference sector also felt the pinch due to the cut in spending by government, with far fewer conferences, workshops and retreats that were held last year.

“This had a marked impact on the general turnover of these businesses.”

Marketing

According to Paetzold of even greater concern for the industry are the severe budget cuts for tourism marketing.

“The Namibian Tourism Board (NTB) as statutory body created to do generic destination marketing for Namibia was hit the hardest by government cuts.”

According to Paetzold destination marketing works in an extremely competitive environment and while bordering countries such as Zambia are paying for partner country status at prominent tourism trade fairs such as the International Tourism Fair and the ITB this year, Namibia made no funds available for such prominent marketing initiatives.

“It borders on ridicule to see that a mere N$10 million set aside by Namibia for destination marketing, as this was the budgetary allocation to NTB last year.

“Tourism has the potential to be one of the strongest foreign currency earners, and if we do it correctly, Namibia's beauty and diversity, is infinite and can be the most valuable resource this country has to offer. Yet in terms of budgetary consideration, tourism does not receive the recognition and contribution it needs and deserves to reach its full potential.”

Maintenance

Paetzold says what is also concerning due to budget and spending cuts within government is that general maintenance on infrastructure is severely neglected.

According to her roads leading to some of Namibia’s key attractions such as Twyfelfontein, Sossusvlei and even the roads inside national parks are in a very poor state.

“This is to the extent that some operators have already threatened to take certain regions’ routes out of their itinerary due to the high levels of breakages and costs of mechanical repairs on their fleet.”

According to her this may have detrimental effects on the lodges, camps and other tourism related businesses in some these areas as they can no longer rely on basic infrastructure, such as well-serviced and maintained roads.

“General maintenance is being neglected especially in the major tourism routes, such as the C14 in the South, linking Sossusvlei to Walvis Bay, as well as the roads across Kunene and Damaraland, which are some of the most popular tourism routes.”

Bottlenecks

In addition to that Paetzold says last year has revealed major bottlenecks at entry points, both at border crossings and especially at the Hosea Kutako International Airport with staff limitations due to budget cuts resulting in lack of efficiency in rolling out the new scanning services at arrival and departure points.

“The state of Hosea Kutako airport is another reason for concern as the ascent of new international airlines to the airport has revealed acute capacity limitations that would need urgent attention and will cost money.”

However she adds that while there are always ups and downs in every business Namibian entrepreneurs seemed innovative and flexible enough to deal with the challenges that face the tourism industry.

According to her the Coastal Region for instance started their “Destination Swakopmund” campaign in which they linked up with airlines and corporates to make the region more attractive for special events and incentive tours.

Upcoming budget

Expectations for the upcoming budget unfortunately seem that there will be no relief in the upcoming year, she said.

“This is worrying as Namibia is neglecting basic maintenance of infrastructure. Added to that is the alarm-bells sounding in terms of the re-occurrence of epidemics like Hepatitis E and Cholera, which may sound shock-waves throughout the international travel community.”

Paetzold said Namibia is still rated high in terms of safety, health and travel convenience, within the African, and global context, but the country needs to be vigilant in guarding that image.

According to her this means the government through the health and works ministries must give priority in terms of rolling out sufficient funding to address the crisis situations on the country’s roads and the capital’s rivers.

NWR

Spokesperson of Namibia Wildlife Resorts (NWR) Mufaro Nesongano, said because the bulk of its business comes from overseas tourists, it is difficult to say how the budget cuts impacted on the company.

“What is true is that as a sector we benefited from the weakened Namibian dollar that fuelled our sector to do well even though government spending was less during this past financial year.”

Nesongano added that NWR however had to accept the decrease in bookings from ministries for the usage of its conference facilities during the past financial year.

“What we are hoping is that once our economic fortunes improve, we will be able to see our ministries returning to make use of our conference facilities.”

According to him NWR has been fortunate that for the past two years it has been solely depended on its own revenue to manage the business.

“That is why the budget cuts did not impact on our daily operations. The only area impacted was our conferencing department that received fewer bookings. However, it provided them with an opportunity to focus on other areas such as events and incentives to meet their targets.”

Expenses

According to Nesongano said over the past three years, there has been an active drive to reduce expenses at NWR.

“We, therefore, have been actively engaging our respective camps and resort managers to curtail costs where possible at their resorts. This is one of the reasons we have managed to thrive under such challenging times.”

He said the total revenue, which is made out of accommodation and food and beverage at NWR has been on the increase over the past few years. “We have therefore not seen a decline in these key areas that drive our business.”

Nesongano said that NWR anticipates for the upcoming budget that Government is going to continue on the path it has and said the company will fully support it.

Ministry

The spokesperson at the tourism ministry, Romeo Muyunda, said the budget allocation to the ministry which has been slashed required reprioritisation and rescheduling of some activities.

“It is also logical to say that our resources to attend to all cases of human wildlife conflict; wildlife crime efforts and our infrastructure maintenance and development, such as roads, water and fences in parks, are strained.”

He said investment in tourism, particularly marketing of the country is limited.