Friday, 4 August 2017
UGANDA :Unstrategic Hospitality,Tourism,Travel Marketing, Lack Of National Airline, All Retard Tourism Growth
Poor marketing strategy and poor access roads to major game parks are setbacks to Uganda’s dream to improve tourist visitors.
This is despite government investing in big infrastructure projects like the overhaul of the Entebbe International Airport and the Kampala-Entebbe Express Way aimed at easing travel to the capital Kampala.
Another project is the Busega-Mpigi Express Way, which lies within the Northern Corridor —a regional transport route that connects Rwanda, Uganda and South Sudan to Kenya’s Mombasa port, and also links tourists to Lake Mburo National Park and Mgahinga National Park, which hosts Uganda’s mountain gorillas.
Stake holders question Uganda tourism marketing strategy.
Most tourists arrivals are from Austria, Germany, the Scandinavian region, France and Belgium, with a few coming from the US and Britain. But the government’s marketing strategy remains focused on Britain and the US.
Stake holders also called on government to review the tax levied on tourist lodges in order to cut accommodation fees.
Access roads within the parks many of them are in bad shape and need to be worked on.
Poaching and human wildlife conflict both are growing significantly.
Recently, someone was found in possession of game meat, he was arrested and arraigned in court. However the punishment was only 100,000/= which the magistrate said was what the law says
Uganda Wildlife Authority says it has improved policing work and game meat market intelligence gathering.
The courts have also been supportive by issuing heavy fines and sentences against wildlife offenders, the authority has introduced night game drives to enable tourists to enjoy a glimpse of hunting lions.
The Uganda Hotel Owners’ Association (UHOA) has asked the government to reinstate the tax breaks that it scrapped recently.
The Association says the suspended incentives should be left available for hotel development outside the Kampala-Entebbe corridor to facilitate the completion of a full tourism circuit.
We are talking about a strategy of developing Uganda as a conference destination to boost capacity utilisation after the Commomwealth Summit, but the truth is that if you had 200 guests leaving Kampala to visit a national park, you don’t have the capacity to handle that volume of traffic by way of accomodation.
Besides, the accomodations that exist in the parks are extremely expensive, the least could be $100 US Dollars a night.
As part of incentives to help the industry build capacity for hosting the November 2007 Commonwealth Heads of Government Meeting (CHOGM), the ministry suspended value added tax and import duty on construction materials destined for CHOGM-related hotel projects.
UHOA is also pleading against a flat deadline for all stakeholders, arguing that while capacity has been indeed been boosted in Kampala, there are still a number of developers yet to get their tax exemption certificates approved by the ministry.
The industry will still need incentives as it now has to build the human resource capacity to ensure acceptable service levels.
It is one thing to have a five-star building and another one to deliver five-star services. All these factors have to be taken into account when evaluating what kind of incentives should be extended to the industry and for how long.
Various players say that with the additional capacity, the country is now in a position to launch into the lucrative meetings incentives, conferences and events (MICE) market.
This will help counter the seasonal dips in arrivals and ensure even capacity utilisation throughout the year, they say.
Uganda typically has one major tourist season running from July to September, followed by short spikes around the Christmas and Easter holidays.
Ms Vanhelleputte said conferences and events had become a new front in the battle for tourist dollars because a lot of money is left behind at the destination from expenditures by delegates, especially from pre and post-event tours.
MICE Uganda is targeting incentive and business travel to Uganda, encouraged by the growing number of multinational corporations setting up shop in the country.
These corporates have a certain level of need, which is basically executive level meetings and seminars whose organisation they would be happy to delegate to a competent handler so that they can continue to focus on their core activities.
Uganda hoteliers are back to the drawing board to lobby the government to cut tax on upcountry hotels and lodges citing rise in operating costs amid low occupancy rates.
Parliament turned down a presidential directive that the facilities be exempted from the 18 per cent value added tax, which would have been reflected in the new budget.
The association’s data shows that hotels outside Kampala are operating at 28-30 per cent occupancy, and safari lodges in game parks at 7 per cent, and only rising to 17 per cent in peak seasons.
At the end of 2016, the national average occupancy rates had fallen to 58 per cent in Kampala, but even then, this figure is boosted by hotels like Serena and Sheraton which can be occupied 100 per cent and above 80 per cent respectively.
In recent years, meetings, incentives, conferences and events (Mice) tourism, which are limited to Kampala, has grown as upcountry hotels and lodges register drops in bookings.
For a hotel to break even, it must operate at a minimum 40 per cent occupancy, meaning that only hotels in Kampala are breaking even.
That is why Hotels are lobbying for tax exemption for lodges outside Kampala that are barely breaking even.
At the Presidential Investor Round Table on November 3, 2016, hoteliers sought a five-year exemption from VAT to allow the industry to grow.
In response, President Yoweri Museveni directed the Ministry of Finance, Uganda Revenue Authority and Uganda Investment Authority to implement this exemption in the 2017/18 financial year.
The Treasury made a range of tax amendment proposals on VAT, which were approved by the Cabinet for the tourism sector.
The tax amendment proposals from the Uganda Tourism Board and the lobby groups under the tourism sector appeared to be yielding positive results.
But Ministry of Finance says that the Treasury was not behind the decision to deny exemption of VAT to the tourism sector.
Don’t ask me, ask parliament. They know why, said Finance Secretary To the treasury.
The amendment sought to exempt VAT on the supply of tourism services, access to tourism sites, tour guides and game drive services — all rated at 18 per cent VAT, which, according to Junior Finance Minister David Bahati,was made to boost the tourism sector with service providers being able to use that tax exemption in marketing and promotion.
But in April 2017, when they were tabled before parliament, the Committee on Finance, Planning and Economic Development denied this exemption.
The tourism sector, which is one of the major foreign exchange earners for the country, requires government support in terms of good infrastructure, roads, airports, tourist roads, security etc. The sector is already benefiting from VAT exemption on hotel facilities.
This exemption should therefore not be granted so that tourism can contribute to the services it requires from government, the committee’s report reads.
But at issue is the state of Uganda’s economic growth which slowed down to 3.9 per cent in the past financial year, from a projected 5.5 per cent.
The slowdown, among other things impacted revenue collection, with the tax body registering a deficit of Ush457 billion ($128.49 million) for the 2016/17 financial year.
The argument for denying the exemption is that the government did not see which other source to get this money from if the exemption was granted.
URA data shows that over the past three financial years, the hospitality sector has been contributing a substantial amount in VAT alone — yielding nearly Ush60 billion ($16.87 million) last financial year.
Players argue that this tax has negative implications for the competitiveness of Uganda’s tourism sector compared with that of its East African neighbours, or even Southern Africa.
Packages in Uganda are more expensive than Kenya.
For example, the discounted rate for local tourists at Paraa Safari Lodge in Murchison National Park is $200, while foreigners pay close to $400 per night, yet for $600, foreign tourists can get three days in Kenya.
That is so, largely because of VAT. Uganda Hotels and Lodges are competing for the same tourists with other countries, so they would rather go to Kenya, South Africa or Botswana.
The East African Community has lined up several projects to increase tourism earnings from $7 billion to $16 billion annually by 2020.
Officials at the EAC Secretariat said the plan is to double the number of tourists from 5 million to 10 million annually. The planned investments are expected to cost $3.95 billion by 2020, up from the current $1.65 billion.
The projects include the introduction of a single tourist visa, a single EAC passport, classification of hotels, increased marketing spend and training of personnel in the hospitality industry.
The establishment of the single tourist visa and hotel classification in the five member states is yet to mature.
Frustration is growing among business people from member countries over delays in pushing through key projects like opening up the region’s airspace, rolling out a single passport and visa, and elimination of non-tariff barriers (NTBs).
They claim the delays in implementing the EAC Common Protocol are slowing the expansion of tourism, trade and business envisaged by the protocol.
EAC Principal Tourism Officer Shedrack Mashauri said the bloc plans to negotiate with local airlines like Rwandair and Kenya Airways to increase connecting flights across the region.
Nearly 60 per cent of tourists’ budgets goes into air tickets. This money could remain in the region if we had well established local airlines with strong connections into key markets..
Such arrangements would also be made with international airlines.
East Africa’s tourism sector is greatly hampered by regional insecurity, Middle East and Eurozone crisis. As such, governments have planned to invest millions of dollars in marketing the region.
While Rwanda, Uganda and Tanzania hope to record increased tourist numbers, Kenya is projecting stagnated revenues following cases of insecurity in the country, especially in Coast Province.
Tourist numbers from the traditional markets of Europe, one of the EAC’s most lucrative tourism markets, dropped in 2012 due to financial woes in their home countries.
In 2011, Kenya’s tourism industry netted Ksh98 billion ($1.2 billion), a 32 per cent rise from the previous years.
In 2012, Tanzania invested $23 million while Kenya and Rwanda invested $20 million and $5 million respectively in marketing. Uganda’ spent $700,000 on tourism marketing.
Delays in implementing a single tourist visa are being caused by a lack of consensus over visa fee collection and how to share it among partner states.
According to the plan, a tourist would apply and pay for a visa in any of the five states and this visa would be applicable for travel to all the countries in the region, thus necessitating a proper revenue-sharing formula.
It is anticipated that issuance of a single EAC visa and passport will not only ease movement across the region, but significantly boost the regional drive to promote the bloc as a single tourism destination.
Plans are also underway to harmonise tourism policies and have standard training and certification, particularly for tour guides and hoteliers.
As we want tourists to stay longer in the region, hoteliers and tour guides will be required to be committed to exceeding tourist’s expectations with great customer service and the highest degree of ethics.
The classification of hotels is nearly six years overdue, said to be due to financial constraints.
Classification creates uniformity and provides better information on the kind of accommodation and other services expected at a given Hotels.