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Kenya tourism in crisis as coastal hotels survive on 25% occupancy rates

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Kenya tourism in crisis as coastal hotels survive on 25 occupancy ratesLately, rumours have been circulating in Nairobi that President Kenyatta was about to create a completely new ministry dedicated to tourism.

Had this happened it would have sent a powerful message to the industry that the administration was beginning to face up to the causes and depth of the crisis.

Indeed, the tourism industry is currently in a stupor. Methinks that we are at a point where President Kenyatta should convene one of those famous State House press conferences he usually calls when we have a national crisis, to announce what he has decided to do to save the industry.

Whenever the conferences are held, you know that the government is admitting it has a crisis in its hands. They have a way of powerfully communicating declaration of commitment to resolve the crisis at hand.

And, I am in no way insinuating that the government is not aware of the gravity of the crisis. Several interventions have been effected. A tourism recovery task force has been in place for months.

Last year, the President even announced new tax measures to support domestic tourism. VAT on air tickets was waived in May last year. Company paid holidays for employees were made tax deductible.

In June last year, the Kenya Wildlife Service reduced park conservation fees. The Kenya Airports Authority also reduced landing fees in Malindi and Mombasa Airports.

Yet if you look closely at the depth of the crisis, these measures amount to mere gestures. Why do I say so? By the last count, 20 hotels had closed shop. More than 21,000 citizens had been rendered jobless.

Hotels at the Coast were at an average of 25 per cent in terms of bed occupancy. As things stand, it should not take long before we start seeing a wave of foreclosures sweeping across the industry.

I don’t want to preach and to belabour the critical role tourism plays in our economy. Tourism is a powerful vehicle for growth in this economy. When we receive large numbers of tourists, the money they spend here plays a catalytic impact across the economy.

Tourism energises this economy. When you are building new hotels and other tourist facilities, you create demand for furnishings and furniture.

The buoyancy of tourism in this economy has also been linked with growth in demand for telecommunications and financial services. A protracted depression in the sector is something this economy can ill afford.

Tourism has over the years evolved into a complex sector with tentacles into many other sectors.

When it is at a low point, the ramifications are felt in many sectors, including agriculture, fishing, food processing and in the manufacturing of garments and handicraft.


Tourism is critically important to the macro stability of this economy. It has always been one of the major foreign exchange earners.

Lest we forget, the exporting sector has been gradually weakening. The signs are in a current account deficit that is permanently weakening.

Or a balance of payments surplus which we achieve from surpluses on the financial account supported by hot money flows.

When you have an economy like ours that has a widening current account deficit, and where the traditional exports — tea, coffee and horticulture — are not bringing in as much foreign exchange as they used to, a depressed tourism sector exposes your currency to permanent speculative pressures.
What must be done to stimulate recovery in the tourism sector?

I can’t claim to have all the answers. But there are several issues around air transport that have to be tackled.

Is it not time we considered liberalising the air transport sector? How many of the world’s scheduled air service seats serve Kenya? 
What can be done to bring the cost of air fare and charter tours into Kenya closer to comparable destinations elsewhere?

How do we address the issue of non-availability of intra-regional air connections and constraints that make it impossible for tour operators to sell multi-county tour packages?

I also think that Kenya Airways, our national airline must be made to play a bigger role in supporting the recovery of tourism.

We can’t allow this critical sector to keep bumping along in the doldrums.


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