Local tourism declining because of inflation

Tujoromajo Kasuto

Simonis Storm Securities has revealed that local tourism might decline in the near future, as local travellers battle with expensive food, fuel and accommodation prices.

Theo Klein, an economist with the firm, states that the hotels, cafés and restaurants category has recorded high single digit inflation rates in recent months, averaging nine percent year on year.

‘’Disaggregating this main category, we see that accommodation services have only recorded double digit inflation rates and average 15.1% YTD. This is evident that local hospitality establishments have little capacity in absorbing a rise in input costs (e.g electricity tariffs, food, fuel, wages, etc.), Klein states in his Hospitality report for July 2022.

The report further noted that the proportion of Namibian guests at local hospitality establishments continues to decline as more foreigners visit, decreased from 34% in June 2022 to 17.9% in July 2022.

Meanwhile, a national occupancy rate of 51% was recorded during July 2022, compared to 32.1% in the prior month and 11.9% in July 2021, according to the Hospitality Association of Namibia (HAN).

This is the highest occupancy rate recorded since December 2019. YTD, the national occupancy rate averages 32.7%, compared to 20.2% for the same period in 2021, showing an improvement in tourist inflows.

According to HAN, there are strong and multi-faceted marketing efforts being carried out to promote Namibian tourism in Europe.

“Namibia’s presence in brochures and media productions (both print and electronic) are encouraging”.

Klein observed that Namibia currently enjoys a prominent presence in promotional offers and

material of key outlets in Germany, where tours to Namibia are part of various holiday packages offered across the globe.

The tourism sector remains a key driver of economic activity in 2022 in SSS view, supporting a 2.5% GDP growth forecast for the year.

“It certainly is a sector of the economy that has a very low base to grow from. We remain positive on the developments that we observe in the monthly data and expect to see other sectors benefiting as well (e.g. transport, retail, professional services, etc.),’’ stated the report.

Central Europe remains Namibia’s key tourist market, 57% of total guests, with 31.3% of guests in July 2022 travelling from Germany, Switzerland and Austria combined, South Africa (12.2%), Benelux (10.9%), France (7.3%) and the US and Canada combined (4.3%).

Regarding the purpose of travel into Namibia, 95.4% came for leisure, 2.7% for business and 1.8% for conferences.

Hospitality establishments in the central area recorded the highest occupancy rate (58.1%), followed by the northern area (51.3%), southern area (50.3%) and coastal area (45.9%) in July 2022.

By Observer