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Travellers may opt to travel to Kenya instead of Tanzania because of increases in the average hotel room rates in Tanzania, as well as the country’s recently introduced VAT on tourism services, some operators have warned.
A recent study found Tanzania had one of the largest increases in overall room revenue, up 14%, according to Hotels outlook: 2016-2020, which surveyed five countries: South Africa, Nigeria, Mauritius, Kenya and Tanzania. According to the report, this is as a result of a large increase in the average room rate that offset a drop in stay unit nights. The removal of the VAT exemption on various tourist services that came into effect from July 2016 might also dampen demand for the destination, said the report.
Katja Quasdorf, Product and Marketing Director at Jenman African Safaris, said they were finding that there was more interest in Kenya instead of Tanzania due to the VAT implementation and, as a result, had been combining Tanzania and Kenya in their tours. “What’s been beneficial is that our Jenman East Africa office is based in Arusha, Tanzania, so we’re able to build good relationships with our suppliers,” said Quasdorf.
Martin Cook, Managing Director of Sense of Africa: East Africa, said while it was too soon to fully assess the impact of the VAT on tourism services, the more budget-conscious traveller would look at Kenya as a more cost-effective option.
Quasdorf said the introduction of VAT on tourism services had definitely impacted East Africa. “Both agents and clients have to deal with price changes after they’ve paid in full. Not just scheduled tours are affected, but FIT clients too,” said Quasdorf. “Our European direct clients are also finding East Africa more expensive as the euro lost value against the US dollar. This has meant further price increases for them [on top of the VAT].”
Cook added that the implementation of VAT, however, had had one good effect. “It has started to wipe out the ‘suitcase tour operators’ who are not licensed and many not insured,” said Cook. “The unexpected spin-off benefit is that this type of operator can no longer exist under the current legislation whereas previously it was easy for them to hide.”
However, Sirili Akko, Executive Secretary of the Tanzania Association of Tour Operators (TATO) said that while he had not consulted members regarding the current status of the industry, he believed it was too early to note the impact of the recently introduced VAT on tourism services. Akko said the cost of cancellation was too high for tourists who had already paid months in advance before the VAT requirement was introduced. Akko said that some agents, tour operators and clients had to share the additional cost of the VAT among them with the understanding that it was out of their control.
Sourse: tourismupdate.co.za
