Dar sinks in global tourism ranking

Tanzania has gone down 10 places in the global Travel and Tourism Competitiveness ranking, trailing Kenya in the region, the latest report shows.

It is ranked 98th overall, up from 88th position in the previous report year. Tanzania is ranked 3rd worldwide for its natural environment, with several World Heritage natural sites, rich fauna, and so much protected land area as to place the country 5th on that indicator.

The report published by the World Economic Forum, states that national policy on environment is not sufficiently supportive of the development of the sector, and is measurably less so than last year.

Other issues of concern, according to the report are security levels in the country, and a focus must be placed on improving the health of the workforce, upgrading the educational system, and improving all types of infrastructure on which the industry is dependent.

“This is buttressed by an important focus in the country on environmental sustainability, particularly as it pertains to the development of this industry. There is also a general affinity of the population to Travel & Tourism, and it is clearly seen to be an overall national priority” reads the report.

Kenya, a country long famous for its tourism attributes, is ranked 18th regionally and 97th overall, up four places since last year. Kenya is ranked 25th for its natural resources, with two World Heritage natural sites and its rich diversity of fauna.

Tourism is a strong priority within the country (ranked 12th on this pillar), with high government spending on the sector, effective destination- marketing campaigns, and country presence at several international fairs and exhibitions.

In addition, there is a strong focus on environmental sustainability in the country, which is particularly important for Kenya given the sector’s dependence on the natural environment. On the downside, the policy environment is not at present conducive to the development of the sector, with bilateral Air Service Agreements that are not open, insufficiently protected property rights, and much time and cost required for starting a business.

In addition, infrastructure remains underdeveloped and health hygiene levels require improvement. Just like in Tanzania, the security situation in the country remains a significant hindrance to further developing the sector.

General analysis of the year 2009, as stated in the report, may go down in history as the year of “make or break” for the Airline and the Travel & Tourism (T&T) sector as a whole. The historically high price of crude oil of $147 per barrel in the summer of 2008 clearly highlighted the vulnerability of the sector to mid and long-term oil prices.

An oil price of $100 per barrel was considered ruinous only a few years ago before it emerged as a realistic scenario to which all players in the T&T sector have to adapt in the recent past.

At such a high level, the price of oil will become even more critical to almost every part of the tourism value chain. Although weak global demand, caused by global economic recession, resulted in a steep oil price decline to $45 per barrel by the fourth quarter of 2008, this will not change the mid- to long-term oil forecast.

Several economic analysts predict an end to the recession in the next one to two years. The International Energy Agency (IEA) estimates that oil prices will recover to more than $100 per barrel as soon as the economies around the world recover from recession.

According to that agency, strong growth in the emerging economies of China and India, along with the maturing of several oil fields, will soon rally the oil price again.

The obvious impact of a high oil price is an increase in the operating costs of airlines. Fuel costs were only an average 18 percent of airlines’ operating costs between 2000 and 2007, according to IATA estimates.

With prices of more than $100 per barrel, as seen during 2008, fuel accounts for more than a third of the total operating cost for an average airline, thus representing the single most important cost item in expenditures.

Low-cost carriers are even more exposed to fuel prices than their higher-cost counterparts, as kerosene expenditures represent more than 50 percent of their total cost base.

Tanzania's tourism earnings, the country's foremost foreign exchange earner, dropped to $1.26 billion in 2009 from $1.28 billion in the previous year, partly due to the global crisis, the central bank said on Monday.

"The dismal performance is partly attributed to the global financial crisis, which has affected major sources of tourists to Tanzania," the central bank said in a monthly report.

"However, improvement in travel receipts is anticipated given the recovery of major economies from (the crisis) and concerted efforts by the government and other stakeholders in promoting Tanzania as a unique tourist destination in new emerging markets."