UGANDA: At last Government Listens To Tourism And Hospitality Stake Holders, Plans To Srap Or Reduce Taxes

Government is finalising arrangements to have taxes on hotels in the country either scrapped or reduced so as to enable entrepreneurs invest in the business to attract more tourists, Minister of Tourism Ephraim Kamuntu has said.

“Many hotels in the country have failed to improve their services to international standards because of the tax burden on them. As government, we have finished reviewing the demands for hotel owners and we are ready to revoke taxes so that they could expand their businesses to attract more tourists,” he said.

He added that the scrapped or reduced taxes will be reflected in the 2017/2018 budget because government wants to increase the number of tourists that come to Uganda annually from the current 1.3m to 4m by 2020.

Prof Kamuntu revealed that the tourism industry currently contributes 9 percent to the country’s Gross Domestic Product, adding that if the taxes on hotels are scrapped, government would collect much money due to the increased number of tourists caused by the improved hotel services.

“There is no government that can survive without the private sector and that’s why we have to consider some of their demands because they help us in terms of development.

Tourism is one of the fastest growing sectors in the world and this means that we must prioritise it as a country,” he said. However, he challenged hotel owners to train their staff on hospitality so that they could get as many tourists as possible.

He made the remarks last week in Kampala while officiating at the launch of the four tourism products that were unveiled by the Uganda Tourism Association (UTA).

The new products are; Uganda National Museum Indigenous dinner, Namugongo Shrine son et lumier, Uganda Rwenzori Cultural Trail and Interpretation capacity building for birding and the Uganda iconic tourism product development.

The UTA president, Mr Boniface Byamukama, said the development of the new products follows Uganda’s quest to be a leading tourism destination with the purpose of creating employment opportunities and increase revenue.

“I urge our partners in the government and private sector to take advantage and invest in these products. By working together, we will sustainably push Uganda tourism sector to the next level. We now have strategic plans that will guide us in policy and planning,” he said.

Mr Byamukama said that their strategic plans include marketing Uganda to the international arena, training tour guides and hotel managers and also embrace the use of internet to get more customers.

But he expressed concern over the high taxes levied on hotels yet others, especially those located upcountry, as well as very low occupancy rate.

Currently, hotels in Uganda have an occupancy rate of 17 per cent. However, if taxes are scrapped, Mr Byamukama anticipates that the percentage will increase since many hotels will then invest in having better services to attract more tourists.

UGANDA: Hospitality And Tour Operators Reject Cosmetic Statistics Created And Fabricated By Tourism Officials

A war of words erupted at the release of the annual Tourism Sector Performance Report for the Financial Year 2015/2016, as operators claimed that the Tourism ministry had been too generous in its views of the sector.

During the AUTO (Association of Uganda Tour Operators) post-Sector Review Forum at Hotel Africana, several tourism sector actors where irked that they had not been consulted to give their views before a final report was made.

The report indicated a 47. 6% room occupancy rate and a 46. 2% bed occupancy rate. However, the percentages were disputed. Some tourism players noted that occupancy rates, especially in the game parks are between 13% and 17%.

Also disputed were reports of a 23% increase in tour operator business in the year 2015/16, an estimation that implied that tour operators enjoyed a growth in sales.

Babra Vanhelleputte, AUTO Board Chairperson said there were several gaps in the report and the AUTO members concurred with her. she said: “The percentages given in the report are questionable. There is a mismatch in the kind of information that is being disseminated and the reality on the ground. The ministry should provide a description of how this percentage was arrived at," Vanhelleputte said speaking about the figures about the growth in business.

"On behalf of private sector and AUTO, we would like to dismiss this report. It is a pity that the final copy of the report was put out before the private sector was given an opportunity to air put their views," Vanhelleputte said.

Vanhelleputte requested for an explanation from UTB on the performance and actual plan for more fair engagements for tour operators with Uganda's PR firms.

"I applaud H.E. President Yoweri Museveni for his directive to scrap Value Added Tax (VAT) on Tourism, and tasked the leaders of Uganda's tourism (the tourism public sector) to follow through the directive and confirm that it is actually implemented in the budget reading for the next financial year," she added.

Civy Tumusiime, managing Director of Pakuba Safari Lodge and an AUTO Committee member says the Ministry needs to be assessment instead of painting a wrong picture.

"Inaccurate statistics paint a wrong image. Statistics from the ministry indicate that business is good and yet in reality, it is not true," Tumusiime said.

She added: "This is affecting our funding. We spend more on expenses rather than the dividends we get since there are a number of economic hardships within the country."

Tumusiime called for regulation with the tourism sector, a separate regulatory authority and market Uganda's tourism especially in other natural endowments rather than concentrating on only Gorillas.

Like many other private sector players, Byamugisha reiterated the need for the sector to present statistics that aren't merely made up. She said: "Of the hotels gross monthly revenue, 47% of the gross revenue pays licences, salaries and taxes. It is no wonder that hotels are closing since business is low. This is in addition to employing over 8 workers rather than the 4 that the report states."

"When I saw and heard the statistics, I wanted to shout but refrained from it so as to keep my job. How can we say that Kampala is operating at 47%? This is not what is on ground and yet the data contained in a document is so authoritative. This is absolutely nuts! My goodness, this is not true," stated, Jean Byamugisha, the executive director, Uganda Hotel Owners Association (UHOA).

Alex Asiimwe, the principal policy analyst in the Tourism ministry, said they the ministry should not entirely be blamed since private sector players are sometimes uncooperative in disseminating information.

"Where do you want us to get the statistics from if you dismiss is or give us wrong information? Asiimwe asked?

Stephen Asiimwe, Uganda Tourism Board (UTB) CEO called for statistical man power especially at the borders and within the ministry

"Tourism is a passion. You do not need to polities it. Instead we need to aim at developing it," Asiimwe said.

The tour operators and the tourism ministry resolved to create a statistics collection committee to collect and disseminate accurate tourism data. The meeting also agreed to have a joint marketing committee for tourism with representation from the private sector.

UGANDA: Uganda Hotel Owners Association New Subscription Fees

For the last 12 years, UHOA has not revised its membership subscription considering the infancy of our sector. However, this has greatly affected the operations of our secretariat in the last few years since our subscription alone has not been sufficient to run our office. UHOA is now one of the key sectors in Uganda's tourism industry and a very vibrant association that participates in many activities. This requires a steady flow of income to remain sustainable.

We have been blessed to get assistance from development partners to carry out some studies on the hotel sector. However, we now need our members to join us in ensuring that UHOA not only has enough income to participate in all tourism activities and organize more robust capacity building programs for our staff but also empower our secretariat by recruiting more staff and regional offices to bring our services closer to our members.

To achieve this, we have had to review our membership fees for the first time in 12 years. Also, after consultations with our partners and parent ministry, we have agreed to open our membership to ALL facilities offering accommodation in Uganda (lodges, campsites, bed and breakfasts, homestays etc). We would like UHOA to be achieve our vision to be "the best provider of hospitable services in the hospitality industry" and also a one stop centre for all accommodation related information.

In the new structure, it has also been agreed that as we wait for UTB to grade all the hotels in Uganda, we shall categorize ALL our hotels into Big, Medium and Small hotels. The Ministry of Tourism is looking to tap into the MICE (Meetings, Incentives, Conferences and Events) market and the grading of the hotels will be very important as we are planning conferences to take place in Uganda.

UGANDA: Uganda Hotels And Lodges Operate At Rarely 10%, Mandatory VAT Partly Responsible

Just a few weeks ago did Ms. Jean Byamugisha, Executive Director of the Uganda Hotel Owners Association, during an exchange of emails lament the fact that low occupancies, especially in upcountry hotels and safari lodges in and around the various national parks, was alarmingly low. She attributed this to the sudden introduction of an 18 percent Value Added Tax, one which tourists unlike in other countries cannot claim back and which subsequently made accommodation as part of their safari more expensive by nearly 20 percent.

'This is why we are fiercely lobbying for VAT on upcountry hotels to be zero rated with the hope that this should bring down the cost of doing business and the cost of the room rate' did she say in early March during which time average occupancies had sunk as low as 30 percent with some locations down even further to between 13 and 17 percent.

Now has the struggle to survive reached critical levels and hotel operators have taken their fight to the government. Ahead of the annual budget reading have key stakeholders once again impressed upon government that their dire warnings of last year, ahead of the introduction of the 18 percent VAT, were not just empty threats as some members of parliament had alleged at the time, but 12 months later have shown serious consequences vis a vis hotel and lodge occupancies.

The hot pre- and post election period did not help either so far, as tour operators from abroad had quietly diverted traffic to for instance Rwanda for gorilla tracking, even though there was in retrospect no cause for alarm at all as the government of Uganda had made good of the promise to keep the country safe from riotous protests.

However, the more recent and hastingly passed amendment to the finance bill currently in place, exempting members of parliament from paying taxes, amounts to giving themselves a 47 billion Uganda Shillings present shortly before the term of the current parliament expires, money which in fact should have been invested in tourism marketing and for lowering taxes and the cost of doing business for Ugandan hotels.

While city hotels' occupancies are said to be within the financial viability ranges is it mostly the safari lodges which have taken a beating.

Other contributing factors named by the organisation were the excessive Visa fees, almost stealthily passed a year ago and again were warnings of the impact of such measures ignored or pushed aside. At 100 US Dollars a person is the entry fee into Uganda now at the same level as the common East African Tourist Visa, which at the same cost allows visits to Kenya and Rwanda in addition to Uganda, but where according to many reports immigration officials made it difficult to get such Visa on arrival, at times demanding - illegal - proof that visitors would indeed go to see the neighbouring countries.

Funding for tourism marketing too has been describes as too low, though, were the funds sharply raised questions were promptly asked by stakeholders to what extend the Uganda Tourism Board would be able to absorb added money and turn it into marketing value addition to actually generate more arrivals through consistent trade fair and sales show attendances than splashing the money away in one off activities, or 'activism' as one regular contributor phrased it.

The three areas combined could end up in a perfect storm for the industry should government once more ignore private sector warnings and a reversal of fortunes for the sector could lead to job losses and sharply lower foreign exchange earnings, besides turning investors for new lodges or resorts on some of the spectacular islands on Lake Victoria away.

Outgoing Tourism Minister Dr. Maria Mutagamba - she did not stand for re-election in her Rakai constituency as she is preparing for retirement from active politics - has carried the message of the private sector into cabinet and promised that the Prime Minister's office will deal with the grievances, however, it will be the finance bill tabled soon during the annual budget reading when the industry will learn if indeed the substantive changes they asked for will be incorporated or, if VAT and Visa fees are maintained, they need to look into a doubtful future.