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AfricaMoney | August 21, 2017

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Budget 2015 Sector Scan: Tourism hits 1 mn footfalls but hotel chains under debt

Budget 2015 Sector Scan: Tourism hits 1 mn footfalls but hotel chains under debt

As Mauritius aspires to become a thriving and competitive economy, tourism poses as a vital economic pillar that the island paradise relies upon to boost financial growth and elevate the standard of living of its population. (Image: Beachcomber)

After the sector scan of the financial services industry on Monday (http://bit.ly/1A406pW), AfricaMoney is following it up with another vital economic pillar to end the week — the tourism sector. As Mauritius aspires to become a thriving and competitive economy, tourism poses as a vital economic pillar that the island paradise relies upon to boost financial growth and elevate the standard of living of its population.

Tourism Sector Overview

This service-intensive industry emerged in the 1980s, representing a tectonic shift for the island economy from a mono-crop dependent economy to a service based economy. As one of the most diversified sectors, tourism stands out as an important economic pillar of Mauritius in terms of employment, GDP contribution, raising social and infrastructural standards, and reinforcing international ties.

Moreover, Mauritius now attracts 1,038,098 visitors from different regions of the world making the tourism sector the third economic pillar with 112 hotels in operation fuelled by better infrastructure, sea and air connectivity has successfully positioned the island as renowned up-market destination on the international scene.

The tourism sector has enlarged its portfolio of services and attracts visitors from traditional markets in the European Union as well as emerging countries such as China and India from where Mauritius is getting an increasing number of visitors.

Institutions such as the Mauritius Tourism Promotion Authority (MTPA), Association of Hotels and Restaurants and Association of Tourist Professional are bodies that have been established to carry out research for the industry, promote sustainable development and implement projects.

However, the newly formed government intends to focus in its socio-economic plan on the development of the tourism sector around four main axes namely: Attractiveness, Accessibility, Visibility and Sustainability of the destination. Moreover, the industry is looking forward to the restructuring of the Mauritius Tourism Promotion Authority (MTPA) with a new legal and institutional dimension adapted to dynamic synergy and commercial outlook.
Hospitality industry’s contribution to the Mauritian economy:

Tourism arrivals in 2014:

United Kingdom, China and India were the main contributors towards the 4.6% growth in tourist arrivals in 2014 compared to 2013. In absolute terms, 1,038,968 tourists visited Mauritius in 2014 against 993,106 in 2013.

In spite of a decrease of 0.4 percent, France remained the top tourists source country and contributed 23.5% of all tourist arrivals in 2014.

France has not yet returned to growth as a source county for Mauritius tourism but is showing signs of recovery, considering a marginal decrease as compared to higher decreases of -6.5% in 2011, -9.0% in 2012 and -4.7% in 2013.

Tourism Total Contribution to the Gross Domestic Product:

According to the World Travel and Tourism Council, the direct contribution of Travel & Tourism to GDP is calculated to be consistent with the output, as expressed in National Accounting, of tourism-characteristic sectors such as hotels, airlines, airports, travel agents and leisure and recreation services that deal directly with tourists. The direct contribution of Travel & Tourism to GDP is calculated from total internal spending by ‘netting out’ the purchases made by the different tourism sectors. Along these lines, the WTTC assesses the total contribution of Travel & Tourism to the Mauritian GDP at MUR 93.1 bn (25.3% of GDP) in 2013, and is forecast to rise by 5.6% in 2014, and to rise by 4.4% pa to MUR 150.6 bn (26.6% of GDP) in 2024.

Tourism Contribution to Employment:

Travel & Tourism generated 62,000 jobs directly in 2013 (10.8% of total employment) and this is forecast to grow by 4.1% in 2014 to 64,500 (11.0% of total employment). This includes employment by hotels, travel agents, airlines and other passenger transportation services (excluding commuter services). It also includes, for example, the activities of the restaurant and leisure industries directly supported by tourists.

By 2024, Travel & Tourism will account for 83,000 jobs directly, an increase of 2.5% pa over the next ten years.

Estimates and Forecasts for Tourism Growth

Tourism numbers

Source: World Travel and Tourism Council

Key challenges facing Mauritius Tourism Sector:

Tourism has become a key source of income and employment in many small island economies including Mauritius. However, this subjects them to international and regional economic and political fluctuations, which can have a huge impact at the macroeconomic level of gross domestic product, government budget, the balance of payments and employment. With the world’s financial meltdown over the last couple of years, many targeted tourist homelands are struggling from a financial viewpoint, especially those which count their footfalls largely from Europe.

As a result, European travellers’ decreasing purchasing power has affected growth and revenue generation from tourism in Mauritius. One of the major challenges that Mauritius needs to tackle is the marketing and branding of Mauritius as a tourist destination in emerging markets, so that the continuing financial instability in European markets does not affect the island.

Thus, emerging areas and new markets should also be taken into consideration, for instance the Asian and Latin American continent, for diversifying the market sources, services and products. Moreover, with the hospitality industry remaining stagnant, struggling with a structural and financial problems despite the last three years volume growth, hotel accommodations and staying packages should be revised while proposing a diverse yet quality service packages and revitalizing the need of the customer.

From an employment perspective, as one the largest sector employing a large number of the Mauritian working force, the tourism sector has different grounds with more diverse potentials to be exploited. As mentioned above further diversification of this sector will eventually create more direct and indirect jobs. Moreover, further emphasis can be laid on the vocational training and professionalization of the individuals in order to provide quality and efficient service.

Potential areas of focus for the development of Mauritius Tourism:

Marketing and Branding:

Mauritius needs to come forward with new marketing strategy for the European market tailored to needs and demand of the European tourists, and enforce its luxury appeal, especially with the setting up of a 7 Star Hotel expected soon in Mauritius. Moreover, with new potential markets emerging, Mauritius should also focus on the Asian market and brand its products based on convenience of travel, especially with new direct flights from China to Mauritius.

Media Relations:

Mauritius must place further emphasis on media relations and public relations program designed to position Mauritian travel and tourism favourably in international, regional and national media. This sector must enhance and maintain developing relationship with writers, journalists, media broadcasters and with a rigorous and effective social media campaigns.

Tourism Awareness:

Air Mauritius and MTPA should organise Tourism Awareness Programmes (TAP) as an ongoing information campaign to create greater awareness the Mauritian tourism industry in Europe. To coincide with Mauritian Week (the first full week in March), special seminars and business parties should be organized in the major target countries whereby leading tour operators and travel agencies will be invited to attend the ceremonies.

Medical tourism:

This segment in the tourism sector has an emerging potential to enhance the tourism sector. In 2014, over 15,000 tourists come to Mauritius for medical purposes and Mauritius is expecting to increase the figure to 100,000 in 2020. Along with the promotion of Mauritius Tourism as a Sea, Sun and Beach concept, promoting Mauritius as a medical hub for Africa can be beneficial in the long run.

Further diversification for social-economic benefits:

From a socio-economic viewpoint, the diversification of tourism will impact the local population both financially and socially. With a relatively high rate of unemployment, tourism is one of the pillars of the economy that can favourably impact social and economic dynamics in Mauritius. However, further vocational and professional training for professional tourism services should be provided by the government for those who are interested in a career in the hospitality space.

Business Tourism:

Today Mauritius is an emerging destination for Meetings, Incentives, Conferences and Events (MICE). The island offers a range of facilities for the business community such as: great personal service, luxurious accommodation, finest gastronomy, world class amenities, state-of-the-art telecommunications infrastructure, safe environment and conference facilities. Besides, the extensive range of golf courses across the country also helps promote island tourism around networking over a game of golf, as is becoming increasing popular in the world of business.

Sources:
World Tourism and Travel Council: http://www.wttc.org/
Statistics Mauritius: http://statsmauritius.govmu.org/English/Pages/default.aspx
The Guardian: http://www.theguardian.com/the-report/mauritius
Euro-Money: http://www.euromoney.com/

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