Tourism index climbs 10.4% in third quarter

The FNB/FENATA Tourism Index, the measure of tourism activity in the country, was back on the front foot, climbing 10.4% from the previous quarter and 6.0% from the same period last year despite international arrivals falling by 20% from the same period last year. The improvement in the tourism index was mainly driven by the weakening of the local currency and the increase in occupancy rates recorded at accommodation establishments.

In this regard, the local currency lost 21% of its value to the Euro and US Dollar. This effectively makes travel cheaper to Namibia for Euro and US Dollar economies. But this has not increased international arrivals at all. International arrivals have actually decreased by 19% and international flights have reduced by a greater margin and hence the load factors are down 10%.

Wolwedans

Despite fewer international arrivals, occupancy rates increased by 9% year on year due to an increased occupancy from local tourists. Bed nights sold to local tourists in- creased by 15% year on year. There was also increased occupancy of conference facilities and a marginal increase in bed nights sold to business travelers.

Despite fewer international arrivals, overall business performance within the tourism sector improved during the third quarter. 66% of the respondents indicated improved business performance over the past quarter up from 55% during the same period last year. Hotel, lodge and tour operators were very upbeat about business performance. Looking to the fourth quarter, business performance is expected to remain the same as the fourth quarter of 2012, with the number of operators expecting good business performance declining.

Emanya @ Etosha

The increased business performance did not lead to a positive revenue outturn as fewer businesses experienced higher revenue flows into their businesses as a result of the number of tourism operators with poorer revenue inflows increased during the quarter. Operating costs were a major problem and almost half the respondents complained about high and rising costs.

However, revenue within the tourism sector is expected to improve during the fourth quarter. To this end, fewer businesses expect poor to fair revenue flows while increased proportion of operators expect good to very good revenue flow during the fourth quarter. Hotel, lodge and tour operators were the most optimistic operator for future revenue flows.

Respondents reported fewer tourist numbers at their establishments – despite occupancy rates indicating the complete opposite. Tourist numbers were particularly poor at guest houses and self catering establishments.

Fiume Lodge

Other operators such as lodges, hotels and tour operators reported increased tourist numbers over the same period. These elevated tourist numbers are not expected to continue into the fourth quarter as tourist arrivals are expected to change from mostly good to fair – a view that was mostly shared by guest farms, guest houses and rest camp operators.

According to the respondents, employment opportunities increased slightly over the past three months. Hotel, lodges and tour operators reported higher employment figures and employment is expected to remain at slightly improved levels over the next quarter.

Epako Game Lodge

Capital expenditure increased slightly during the quarter under review, with bed and breakfast, guest houses, hotels, lodges and tour operators increasing capital expenditures. Guest farm operators were the only respondents that indicated lower levels of capital expenditure. Although investment spending is expected to slow down during the fourth quarter, it is expected to remain slightly positive.

Most of the demand side issues such as weak demand from source markets continue to dissipate during the third quarter, but rising costs continue to plague the industry. 49% of the respondents complained about rising costs, up from 39% in the previous quarter.

Constant food, fuel and banking inflation eroded profits and although official statistics show that food prices rose by 6.5%, the basket of consumption items most prevalent in the tourism in- dustry namely fruits, vegetable, transport and packaged holidays, rose by 11 to 25 percent year on year and therefore erode almost half the benefits of the weaker local currency that would accrue to foreign tourists.