Tourism: new markets not the answer

March 18, 2009
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, NAIROBI, Kenya, Mar 18 – Players in the tourism industry are cautioning that diversification to new source markets may not necessarily be the best way for the sector to survive the global economic crisis.

Kenya Wildlife Service (KWS) Managing Director Julius Kipngetich warned on Tuesday that the country’s key source markets are under severe attack from key competitors.

“For us, we need to defend our existing markets at this particular time. So our forays into the Chinas and the rest should hold because our current markets are also under serious attack by our competitors, especially Tanzania,” Mr Kipngetich pointed out.

The sector has seen visitor numbers dwindle over the last year as a result of the post election violence that rocked the country, and is also currently suffering the effects of global economic crunch that is biting most of its key source markets.

The KWS boss’ counterpart, the Chairman of the Kenya Tourism Federation Lucy Karume, revealed that Kenya’s four biggest markets UK, USA, Germany and Italy accounted for 38 percent of the revenue earned by the sector, which equalled to the other 23 destinations.

“This shows why our source markets cannot be replaced by numbers from the emerging markets,” Ms Karume stated.

While making presentations at a forum to address how businesses can survive the global economic crunch, these sector representatives proposed improved product pricing, a stimulus package for the airline industry, the encouragement of repeat visitors and more government spending on the sector.

“We have not invested significantly over the years in the sector. Treasury has been milking this thing since independence but putting very little to it and I can foresee the cow will crash because you have over milked it,” Mr Kipngetich said.

At the same forum, the banking industry was put on the spot for not providing loans for development in the tourism sector.

Mr Kipngetich noted that commercial banks do not loan the sector money because they consider it high risk.

He said that despite the current global economic slump there is need for a strong foreign direct investment drive for the construction of new lodges.

This is an issue that seems to be dividing players in the sector right in middle, with some arguing that the country has enough bed capacity while others insist this may not be the case.

“The post election violence created that new capacity but in the next boom if we actually drive marketing the way we are thinking, we will run out of bed space which will create a crisis,” Mr Kipngetich observed.

He said KWS was developing management plans for new lodges for the park.

“The question should be what incentives we should give to investors who are putting up new lodges,” he said, explaining that setting up a lodge costs between Sh200 million to Sh500 million.

“My worry is who will invest without possibility for loans for long term investments from banks?”

He noted the need for the re-capitalisation of the Kenya Tourism Development Corporation (KTDC) that could be used to finance the construction of new lodges in the country.

“The original purpose of KTDC was to fund the sector. So recapitalise it to support long term capital for the industry because the banks do not lend to us if you are looking at a very long pay back period,” he said.

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