Global financial crunch put Tanzania tourism industry under pressure

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Arusha, Tanzania (eTN) – The global financial crunch and its ripple effects
is putting local tourism industry under renewed pressure, after a lull of nearly ten years.

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Arusha, Tanzania (eTN) – The global financial crunch and its ripple effects
is putting local tourism industry under renewed pressure, after a lull of nearly ten years.

Tourism, a major foreign exchange earner, had begun to show signs of recovery after the shock of 1998 Dar and Nairobi twin terrorist bombing attack on US embassies.

The widely circulated “travel advisories issued thereafter by the United States and the United Kingdom authorities almost brought the local tourism industry to its knees.

This time around, as the US meltdown shaking the foundations of the global financial system, its ripple effects have already felt rolling down to local tourism doorsteps.

Currently, stakeholders in the tourism industry in Northern Tanzania’s safari capital of Arusha are counting loses attributed by the World financial crisis.

Manager of Arusha Tourist Inn, a popular joint for budget tourists, Solomon Laizer, said most of USA and European guests who had earlier ordered their reservations have cancelled due to the global financial meltdown.

Between October and November, Laizer added that his tourist facility alone recorded nearly 60 percent booking cancellations.

The director of the Great Maasai Adventure, Lotta Mollel, said his company had also experienced massive bookings cancellations of tourists, from the US, who were expected to pocket his firm a large chunk of foreign exchange.

It is understood that a certain major tour firm here has already sent about 30 workers home on fear of global financial meltdown impact on the tourism trade.

“This is a just thriller, a really major effect will be felt in six to twelve months to come if early response measures are not taken,” Mustapha Akunaay, executive secretary for Tanzania Association of Tour Operator (TATO), said.

Significant change in the economic plight of the US citizens is, for instance, expected to limit the number of foreign tourists visiting East African destination, including Tanzania.

Europe, America and Canada account for 75 percent of tourists visiting East Africa and if their number declined by half, the impact would be in the range of 500bn/- in foregone tourism earnings.

And with foreign money flowing into Tanzania on the decline, all eyes will be focused on the degree to which local consumers can fuel growth in the economy.

In the tourism sector, for instance, how well Tanzania might fair during the crisis will depend on the degree to which Tanzanian consumers fill up the empty hotel rooms.

The management council of TATO, at its regular meeting held on October, 9, 2008, considered the possible impact of the current world financial crisis on Tanzania economy particularly the tourism industry.

In the course of the discussion, the council noted that, should the financial crisis escalate into full recession, Tanzania which is at the receiving end of this catastrophe will severely be affected.

“Local import and export capacity will be severely hit and impaired by the looming world economic slow down,” the council said, calling for the government to emulate other nations which are taking pre-emptive measures to the extent possible to insulate themselves from the crisis.

It is understood that the neighboring Kenya has already lowered park entry fees for some of its unpopular National Parks as an immediate response to the effects of the global crisis.

TATO, however, fear that if the financial crisis escalates into recession, the Tanzania-bound-potential travelers will change their minds by either cancels the idea of traveling or choosing another less expensive destination.

“We are aware that Kenya has already lowered its park fees for some parks” Akunaay said, stressing, “this move will likely divert potential Tanzania wildlife tourists to Kenya.”

Already, TATO sent a letter to the Tourism Confederation of Tanzania in a bid to strategize with other organization like Tanzania Private Sector Foundation and Tanzania National Business Council on how to face the crisis.

“In order to cope with the situation, in our view, the government should advise its Wildlife Conservation Authorities to lower park entry fees for foreign tourists as a first step” the letter read in part.

TATO suggests that Tanzania National Parks Authority (TANAPA) ought to look into the possibility of either reducing park entry fee by between 15 – 20 percent or rather offer inducement of one free entry out of very package sold to tourists.

On the part of Ngorongoro Conservation Area Authority (NCAA), TATO said it should temporarily suspend the US$200 Crater Service charge on every tourist vehicle entering the crater per day.

The second measure, TATO noted the Tanzania Airports Authority should consider reposition the Arusha Airport, some 8km west of Arusha heart and become a gateway to northern tourist circuit in order to ease traveling costs to most tourists.

“The Tourism Private Sector such as Tour Operators, Hoteliers, an Air Charter companies also should reduce their profit mark up by between 7 and 10 percent,” TATO recommended.

“We believe that if these proposals will be accepted and immediately implemented, cost of traveling to Tanzania will be attractive to potential tourists,” Akunaay explained.

Analysts, however, fear that most governments including Tanzania are always suspicious of motives behind requests of such nature that private business sector always capitalize in situations like this to make more money.

“The worst outcome is when the government finds fall in revenue collection; increase the tax rates to fill in the Budget deficit” a prominent tour analyst one Eva noted.

In order for the cherished idea to be implemented, TATO proposed the Tourism Confederation of Tanzania through the Tanzania Private Sector Foundation to bring this issue to the attention of the executive director of the National Business Council, with a view to convene a meeting of the council for further recommendation and directives on the matter.

A total of 3,310,065 tourists visited the East Africa last year.

Kenya, the region’s biggest economy got 2, 001, 0034, with the US accounted for 5.9 percent of the total number of foreign tourists that earned Kenya Sh69 billion.

A halving of the number of visitors from the US would, for example, leave Kenya two billion shillings worse off in tourism earnings with a huge dent on the country’s foreign currency position.

Tanzania received a total of 719,031, 550,000 while Rwanda recorded 40,000. The country with a fast growing economy whose main tourist attractions include the mountain gorillas in the Virunga Hills, recorded 26,000 visits in 2004.

Tourism in Burundi is also picking up significantly, though statistics on last year’s tourists arrivals are yet to be made public. The country recorded 133,000 and 148,000 in 2004 and 2005, respectively.

While Tanzania targets to hit a million tourists arrivals in 2010, Rwanda is adjusting itself to record 50,000 tourists in 2008. If Tanzania’s target succeeds, the industry would add an extra US$1.7 billion in 2010.

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