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Tourism sector in recovery mode

May 22, 2023 2069
Tourism sector in recovery mode

Namibia's hospitality sector is showing signs of recovery, with increased occupancy rates and growing tourist inflows in April 2023, latest data reveals.

The industry's rebound is largely attributed to leisure tourism and improved connectivity with key international markets.

However, analysts warn that rising costs and economic challenges for locals pose threats to full recovery.

"Tourist inflows improve before Namibia’s peak tourism season (May to September) commences. The occupancy rate in April 2023 across nationwide hospitality establishments stood at 51.8%, compared to 36.5% recorded in the same month last year. This is the highest monthly occupancy rate recorded for 2023 thus far," said Simonis Storm Researcher Angelique Bock. 

According to recent statistics, the nationwide occupancy rate across hospitality establishments rose to 51.8%, a substantial increase from the 36.5% recorded in the same month last year.

Bock said this marks the highest monthly occupancy rate of 2023 so far, indicating positive growth.

The year-to-date average in 2023 stands at 40.3%, only 3.7% lower than pre-pandemic levels of 44.0% in 2019.

This comes as the firm’s Quarterly Economic Review of 1Q2023 predicts that tourism will be one of the key drivers of Namibia's economy for the remainder of the year.

"Investments in projects such as green hydrogen, aquatic ventures like salmon farming and kelp production, gas pipelines, and mining explorations are expected to contribute to the growth of the tourism industry.

Moreover, Fly Namibia recently increased its weekly flights to Oranjemund from three to five, accommodating the rising number of Shell and Debmarine staff and driving higher occupancy rates in hotels and guesthouses in Luderitz and Oranjemund," said Bock.

In April 2023, she notes that a total of 22,610 rooms and 44,482 beds were sold, reflecting a 65% decline compared to the number of rooms sold in April 2019.

Bock attributes this discrepancy to the closure of some tourism facilities due to pandemic-related lockdown measures.

Meanwhile, when analysing the occupancy rates by region, the central area of Namibia recorded the lowest rate at 37.3%, while the coastal area had the highest occupancy rate of 58.1%.

The northern and southern areas followed closely, with rates of 56.0% and 49.3% respectively.

Leisure tourism remains the primary driver of tourist inflows, accounting for 98.3% of visitors in April 2023. Business travellers constituted 1.7%, while conference attendees represented 0.02%.

The majority of visitors during April 2023 originated from Germany, Austria, and Switzerland (41.0%), with locals (18.6%), South Africans (8.3%), and the French (6.8%) occupying the subsequent highest occupancy rates.

The Hospitality Association of Namibia (HAN) attributes the growth in visitors from key source markets to the availability of 10 direct weekly flights between Windhoek and Frankfurt.

 "The weakened exchange rate of the Rand also acts as an advantage for foreign tourists, as their Euros have increased spending power. Inflows from Europe have been steadily increasing since January 2023, signalling a positive trend for the industry," said HAN. 

Despite these positive developments, Simonis Storm notes that locals are occupying fewer rooms due to strained economic conditions

"Accommodation services became 15.7% more expensive in April 2023 compared to April 2019. Accommodation services inflation stood at 6.7% year-on-year, while food inflation reached 13.5%, surpassing the headline inflation rate of 6.1% in April 2023," she said

Further adding that higher costs limit locals' spending on accommodation, as disposable incomes are impacted by rising food prices and other living costs.

The firm adds that increased fuel costs, higher electricity tariffs, food inflation, and rising interest rates contribute to the mounting operational costs for local tourism and accommodation operators.

Furthermore, the rise in air transport costs also affects the tourism industry, with a 9.0% increase since April 2019. The most recent inflation rate recorded in April 2023 stood at 5.4% year-on-year.

"This can be attributed to the limited number of airlines serving Windhoek and Walvis Bay from neighbouring countries, as well as the rising operational costs faced by airlines operating in South Africa. Consequently, a decrease in regional tourist inflows and local tourism is expected, while international tourist inflows continue to drive the ongoing recovery in the local tourism industry," said Bock.

 

 

 

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Last modified on Tuesday, 23 May 2023 18:07
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