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Industrialization, is the current buzzword, and in the traditional sense means hiring a massive workforce to convert raw materials into finished products for for-profit sales. The government then expects to collect a substantial amount of income from the direct and indirect taxes of these industries and to solve the "unemployment" puzzle. Here is! A win-win!
It was then (read the coal era), but in the modern world (cool era) where artificial intelligence integrated into the machines replace the majority of the hand-d & # 39; work, we must also reinvent the future. In particular, if industrialization involves significant opportunities for the workforce, then the service industry and the knowledge economy must be part of this future "industrialization."
The hospitality industry offers endless opportunities. The Eiffel Tower – an artificial steel structure – attracts more tourists (about 7 million per year), admittedly for a very short time, than our country (1.5 million tourists a year) despite the well-known attractions.
A recent PwC publication (see www.pwc.com/tz for publication), Outlook Hotels: 2018-2022, provides an overview of the trends and perspectives of the hotel industry in South Africa, Nigeria, Mauritius, Kenya and Tanzania, and identifies some of the challenges for the hospitality sector
The report notes that room revenues in Nigeria and Mauritius have shown double-digit growth, but Kenya and Tanzania have seen declines in their incomes. The decline in Kenya was a consequence of the political challenges following the Supreme Court's cancellation of the presidential outcome of the month of August, although in December tourist arrivals rebounded. For Tanzania, it indicates a drop in overnight stays in 2017, resulting in a 5.5% decrease in room revenue compared to 2016. The report associates this decrease with various regulatory changes (notably the introduction of VAT for 18% on tourist services, visa fees for business trips at $ 200, fixed rate concession fees for hotels in national parks – some reaching $ 59 per person per night) and government austerity measures.
The growth of hotel receipts in Tanzania is expected to rebound and show annual increases of 9.1% per year (marginally behind Kenya (9.6%), but ahead of Mauritius (7.2%) and the United States. South Africa (5.6%), faster growth of global GDP, more flights and new hotels, but at the same time, he notes that the increase in taxes and rates will remain an obstacle to growth, which means that growth would be even stronger without these challenges.
The report notes that over the next five years, seven new hotels are expected to open in Tanzania (including Rotana, Anantara, City Lodge, Hyatt Regency, Sarovar Portico and Ritz-Carlton) and add 900 rooms by 2019 and 1,200 by 2022, a cumulative gain of 16% .This will increase the room revenue by 206%. million in 2017 to $ 319 million in 2022, at a projected occupancy rate of 58.5%.
C & # 39; e It's a good sign that investments are important and expectations are high. Nevertheless, the country receiving on average 1.5 million foreign visitors and is expected to reach about 1.9 million visitors in 2022, we are still far from the target of 6.1 million envisaged for 2025. The government and the other stakeholders must therefore develop strategies on how to be better positioned to achieve this aspiration. I believe more can be done to better understand the needs of visitors, to review the price competitiveness of our product and to diversify the product.
Data Analysis and Digital Marketing
A tool to better understand the market is the analysis of large data and digital marketing. The current data collected does not indicate the number of visitors by country, geographical location, age, income bracket, return of travelers, etc. Collecting the right data will make accurate and appropriate strategic decisions based on useful information. For example, are the interests of a 20-something amateur tech hiker the same as those of a retired 60-something visiting country? Collecting the right data will enable specialized service offerings leading to the diversification and growth of revenue streams.
Reduced costs, particularly taxes and fees that make Tanzania an expensive destination, could also help. In this regard, further consideration should be given to aspects such as visa fees (especially for business travelers), as well as the impact of the fixed-rate concession fee for hotels in national parks. A reduction in these costs would probably be offset by an increase in other direct and indirect taxes generated by the additional economic activity resulting from the increase in the number of tourists. In addition, it is necessary to promote local tourism, which raises the question of who is local? Currently, the nationals / East African citizens are treated as locals, but why not extend this classification to other African tourists, say the SADC nationals. This can lead to an increase in the number of tourists due to affordability and strengthen relations with member countries.
Most visitors to the country come for leisure and business trips. The tourism industry is one-way where Zanzibar and the North Circuit – Serengeti, Ngorongoro and Mt. Kilimanjaro generates the most revenue. As a result, there is a clear need for site diversification, particularly to ensure that southern, western and eastern routes generate sufficient revenue. Industry stakeholders should find a way to increase the number of tourists in the designated circuits. The government should offer incentives and attract foreign and domestic investors to these regions. This is a call for public and private partnership to boost tourism as a whole.
In addition to geographical diversification, another opportunity is to diversify the product. Examples of countries that have taken this step include India (with medical tourism, worth about $ 3 billion), Singapore (as an educational and technological center) and the Latvia and Israel (with agro-tourism).
itself to earn tourism revenues other than traditional safaris and seaside destinations. A quick win – and take a leaf from Rwanda – must surely be business tourism / conference – but to do that, one needs a serious look at what makes us less competitive on that front; for example, Rwanda visa fees (including for business travelers) are relatively low.
In addition, the government and the private sector should ensure the integration of support industries in the sector. The sector should ensure that most purchases are locally sourced, increasing domestic production and boosting support industries without compromising on quality. This will result in a huge multiplier effect with a positive effect on the economy. Small and mid-sized shops should play a key role in the industry to cater to budget travelers by providing a memorable experience to tourists.
Finally, local skills and quality of service should be at the forefront to ensure the country's hotels and tour operators can compete on the world stage. It is necessary to have trained professionals who provide quality service to ensure customer satisfaction – from cafes, restaurants to hotels. There is a cry (Twitter to be precise) that our customer service is poor and unpleasant.
The tourism industry is already a major source of foreign currency – but imagine the economic contribution even greater if we could reach the goal of 825 million visitors a year in 2025
M . Marandu is a senior partner at PwC – Assurance Services. The opinions expressed do not necessarily represent those of PwC. For PwC updates on taxation and other issues, follow @pwc_tz or visit our website www.pwc.com/tz
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