Tourism too volatile to drive the economy

Early July last year, a female tourist was shot dead in Mombasa, becoming the second tourist to have been killed that month, after a Russian visitor had been robbed and murdered by a gang in the same city. As was expected, the UK and by extension the EU were quick to heighten their travel advisories to their citizens coming to Kenya warning them of the dangers ahead. 

This inevitably caused a huge drop in tourist arrivals since the EU is the highest tourist source for Kenya.  The government, through its tourism agency, Kenya Tourist Board (KTB), tried to don a brave face and re-assure tourists and the hotel industry that all was well. While agreeing that the industry had been hurt, the government insisted that the arrival numbers in the first quarter of 2014 fell only marginally by 4%. This claim was met with scepticism from no other than TPS Eastern Africa, a leading hotel chain that operates the Serena chain of hotels, luxury lodges and tented camps.

The company’s own review of how its hotels fared in the first half of 2014 compared with the previous year, showed that business at the coast fell by 30-50%, while inland trips to destinations such as the Maasai Mara Game Reserve and Mount Kenya, dropped by 20%. 

Ironically, both the government and hotel industry may be right in their estimations since one was looking at numbers and the other value. Therefore although the numbers of tourist arrivals dropped albeit slightly, the small drop was occasioned in high spending tourists whose absence meant that their impact value was much higher than the mass numbers values signifying a policy disaster in the handling of the tourism industry. 

For the longest time, the Kenya Tourist Board has undertaken a quantity over quality approach where we pride ourselves with masses of tourist arrivals regardless of how much value per capita they bring to our economy. Such a policy framework is flawed since it creates higher risks of shocks due to greater reliance on brand and perception to lure the visitors. 

Low-spending low-value tourists are likely to take less security precautions and hence are get involved in risky situations leaving their wellbeing to happenstance. However, as occasioned by the robbery incident, such a minor security incident is as likely to have as much perception effect as a major terrorism related incident especially if it is caught up by international media.

Talking of which, the terrorist-related security incidences in Northern and Coastal Kenya that peaked in the last quarter of 2014 have forced economic experts from the World Bank to revise their otherwise optimistic outlook of Kenya’s projected economic performance for 2015 downwards from a high of 6.5% to a more realistic 5.3% growth. 

This is worrying for us as a country since our achievement of Vision 2030 is dependent on us realising a consistent 10% growth over the next fifteen years. What is more worrying, though, is that our over reliance on tourism as a leading economic pillar is proving to be a high risk gamble given the volatility of that industry. 

According to the Kenya National Bureau of Statistics (KNBS), tourism accounts for 12% of Kenya’s economy earning revenues that average $1.1billion (about Sh90 billion) annually. This is by no way a mean contribution. It is no wonder that when the tourism sector sneezes, the economy easily catches a cold. 

Given the vulnerability of tourism to economic shocks, it may be time for our policy makers to consider whether it is wise to promote mass tourism as the mainstay of the economy. No other industry is as inconsistent and relies too much on perception and threats sometimes beyond our control as tourism. For starters, we can manage this perception by re-branding from a mass tourism destination to a niche high-value destination. 

 

But in the long-term, we should seek to grow our economy organically through manufacturing and agriculture. As China showed, real growth has to be based on actual industry with the service industry only emerging as a support base rather than the opposite.  

Sign Up