Improved Cost Competitiveness Lifts Travel Sentiments – FNB

The FNBFENATA Travel Index, the measure of tourism activity in the country, rose by 2.7 percent from the previous quarter and 11.2 percent from the same period last year, according to Namene Kalili, Manager Research at FNB Namibia.

Kalili says the index closed off the fourth quarter on a g note due to favourable exchange rates for foreign tourists, higher occupancy rates, stable domestic prices and ger load factors on international flights. “The local currency lost ground against the Euro and the US Dollar and thus travel to Namibia was 9 percent cheaper for European tourists and 6 percent cheaper for American tourists based on exchange rate fluctuations. Furthermore, prices for accommodation contracted in local currency terms by 2.2 percent. The load factor on international flights increased by 10 percent on account of fewer international flights and hence tourists flew to Namibia more efficiently. All these factors improved Namibia’s cost competitiveness during the fourth quarter and hence the sector’s GDP contribution should increase accordingly.” Positive revenue outturn was widespread, with tented lodges, hotels, tour operators, activity operators, guesthouses and bed and breakfast establishments being the most optimistic, according to the researcher. According to the index although international arrivals declined over the fourth quarter, there was an increase in occupancy rates measured at local establishments. “This was due to high numbers of local tourists, who accounted for 45 percent of the total bed nights sold during the fourth quarter, particularly when it came to guesthouses, rest camps, tented camps, and tented lodges. Operators expect a 10 percent increase in tourist numbers during the first quarter of 2014, with most of the tourists checking into bed and breakfast, guest farms, guesthouses and tented lodges to maintain the growth momentum into 2014.” Employment levels also continued to improve during the fourth quarter as the incidence of job losses within the sector continued to dissipate, while the incidence of new jobs began to increase. Employment numbers are projected to improve marginally during the first quarter, particularly in the air charter, tented lodges and hotels subsectors, while the vast majority of the remaining subsectors expect employment levels to remain the same. Kalili said capital expenditure increased during the fourth quarter, with 35 percent of respondents reporting increased capital expenditure levels, particularly in the guest farm, lodge and tented lodge subsectors. The only subsector that reported negative capital expenditure levels was the self-catering subsector. Looking forward to the first quarter, capital expenditure is expected to increase by 4 percent with guest farms, guesthouses and tented lodge subsectors leading the investment curve. Coincidently, these are also the same establishments that expect g increase in tourist numbers.

Fewer issues were reported during the fourth quarter. Issues mainly pertained to demand, cost and government matters. On the demand side, the issues were mainly positive in regard to the weaker local currency that has made Namibia more cost competitive for international travellers and therefore stimulated demand in foreign source markets. “On the cost side, fuel prices remain a concern for the industry and particularly for the air charter subsector, which has seen input costs increase due to foreign currency translation.” By Staff Reporter

Source : New Era