Tourism Plummets

Tourism Plummets

As tourism to East African continues to plunge, Kenya’s mistaken approach is to lie about the statistics.

Last week Kenya’s Central Bank reported that “tourism continues to do well” and that visitor numbers were up nearly 55.4% over last year. Read a bit further. Actual revenues, which the CBK can’t lie about as easily, dropped 6.5%.

Last year saw a precipitous decline in Kenyan visitors because of the political violence at the beginning of the year. Revenue numbers are inflated by the CBK’s use of Shilling/Dollar conversion techniques.

The Kenya Tourist Board states it more truthfully. Annual numbers this year are likely to be 60% of those in 2007, before the political violence.

The truth is further told by the tourism companies in Kenya. Major companies like Cheli & Peacock, Abercrombie & Kent and Sarova Hotels have instituted 20% pay cuts, and reduced work schedules by 20%. At first this might seem like a fair if generous move, but it’s basically to avoid paying the high severance fees mandated by Kenyan law.

And with nothing at all to do with lying statisticians, Kenya’s drought is devastating tourism even further as many companies (like EWT) substitute Kenyan itineraries with Tanzanian ones.

Uganda reports a decline of 30% in tourist revenues.

Tanzania seems to be fairing the best, but it’s nothing to write home about. At the end of June, eTurboNews reported nearly 30% of Tanzania’s tourist industry workers have been sacked and that revenues are likely to drop by nearly 10% this year.

I’m a numbers’ guy, and I’m frustrated that none of these numbers adds up. You don’t cut 20 or more percent of the working force if revenues are only dropping by 10%. But the cutting is real, can’t be disguised. Tourist numbers can’t be increasing by half, with revenues decreasing by 10%, despite impoverished explanations that discounting prices explains this.

It doesn’t. It can’t.

The truth on the street exceeds the institutional mumbo-jumbo. Nairobi and Arusha are awash with bottom feeders at the moment, like the U.K.’s Pathfinders, representatives of whom were seen scouring all the mid- to up-market properties that are currently stressed. The soon-to-open Holiday Inn in Arusha has reps on the street not just promoting the new property, but looking for other properties they can consume and rebrand.

The biggest rumor on the streets in Nairobi is that Canada’s Fairmont Hotels wants to off-load two nonperforming properties, The Ark tree hotel and the Aberdare Country Club, for under two million. Holy smokes! When Fairmont bought the properties 5 years ago they were valued at $6.5 million.

The reality pressures are building. I fully expect the premature publishing of 2010 rates by most major properties to be revisited, and that actual prices will fall even further.