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Tourism Sector Trouble [analysis]

Tourism operators send SOS to authoritis as industry takes worst hit in almost a decade

On March 19, the Uganda Tourism Association (UTA) issued an unusual press release. A quick glance at the document, which was signed by Herbert Byaruhanga, the association’s chairman, indicates that all is not well in Uganda’s tourism industry. UTA comprises tour operators, travel agents, safari guides and hotel owners.

“Over 90% of all bookings from Europe and the United States have been cancelled and as a result, over 20,000 people have already lost their jobs this year including 90% of tour guides who have been rendered redundant,” wrote Byaruhanga.

The release indicates that tourism arrivals and earnings are currently at their lowest since 2007 and have actually dipped by over 70% compared to 2014 figures, as a result over 15 tour operators have had to close shop in 2015 alone.

Many in the private sector blame the Ebola outbreak in West Africa and the Anti-homosexuality law that has since been declared unconstitutional by Court. Still, owing to little information about Uganda,

many potential European and American visitors think Uganda is a homophobic country. And that is not all.

UTA officials say Uganda is turning out to be an expensive destination compared to other places because of the limited supply of accommodation facilities near major tourism attractions and the high costs of service provision exacerbated by the recently introduced 18% VAT on all upcountry accommodation where the major tourism attractions are.

UTA’s calculations based on a ten-day safari show that VAT charged on upcountry hotel increases the cost of visiting Uganda by $500 per person just like the 10% bank charge when tourists transfer money to tour operators’ accounts.

As a result, cancellations have been made because Ugandan tour operators had to increase earlier-agreed prices because of the new VAT– a move that was interpreted as breach of contract by tourists that had booked to visit Uganda. In contrast, Uganda’s competing destinations like Tanzania, Kenya and South Africa do not charge VAT on accommodation.

UTA officials say the government needs to urgently do something to save jobs, increase number of arrivals and create more jobs for Ugandans considering that every tourist that visits Uganda creates two jobs along the value chain for taxis, restaurants, accommodation facilities, boda-bodas, manufacturers of beverages, entertainment places, and community tourism initiatives.

For years, stakeholders in the sector have appealed to the government to increase the budget for tourism promotion to match the competition in the region but little has been realized. Some stakeholders insist this is the reason Uganda still lags behind its peers when it comes to reaping benefits from the tourism sector.

Thanks to limited marketing and branding in key source markets such as Germany, the US, the UK and the East Asian countries [Japan, China and South Korea], Uganda is the least visited country in the East African region despite being the most endowed in the region.

Interestingly, Uganda’s tourism industry was identified and prioritized by the government as a primary growth sector in the 201011–201415 National Development Plan. In addition, Vision 2040 stresses that Uganda’s tourism industry has the potential to yield at least $12 billion annually which is half of Uganda’s current GDP.

A 2012 World Bank report entitled “Uganda Tourism Sector Situational Assessment: Tourism Reawakening,” says Uganda is clearly not yet realizing its full potential as a tourism destination despite its tremendous resource base, which allows it to offr a combination of safaris, primate tracking, aenture tourism, bird watching, mountain climbing and cultural tourism products.

According to the World Bank report, the tourism industry might be one of the fastest growing industries in the world but it is also one of the most competitive globally.

It adds that the competition is constantly growing as more and more destinations around the world seek to attract tourists and more companies and organizations become involved in the highly skilled business of destination planning, transportation, accommodation and catering for tourists.

Between 2001 and 2010, international tourism arrivals in Uganda more than quadrupled from 250,000 to 945,000. The following year, Uganda touched the one million mark representing an increase of 34% an indication of growing tourism markets. This rapid improvement in tourist arrivals has occurred even when the sector only receives 0.013% of the national budget yet its current total contribution to the national economy has been valued at $ 1.7 billion or 9% of GDP.

But even with the dividends of more employment, revenue and foreign exchange, Uganda still lags behind its regional competitors in terms of market share, thanks to gaps in its policy framework, leadership, coordination and funding.

In the 201314 tourism sector annual performance report, the overall approved budget allocation for the ministry was Shs 65 billion and this was a 7% increase from the previous year. But of this, only $350,000 (about 900m) went to marketing the country the rest of the money went into paying wages and office rent.

In the 201415 financial year, although the government allocated $2m to UTB, Maria Mutagamba, the tourism minister told The Independent recently that the bulk of that money went into paying salaries and organizing the Africa Travel Association (ATA) world congress meeting held in Kampala last November. But even if the $2m had been sunk into direct marketing, it is still far less than what Uganda’s neighbours and competitors invest in marketing alone with Kenya said to be leading the pack ($40m) followed by Tanzania ($17m) and Rwanda ($5m).

Indeed, many experts agree on one thing – Uganda’s neighbours do not compare when it comes to natural endowment. For instance, barring wildlife, historical sites and the coastal white sandy beaches, Kenya and Tanzania have less to offer. However, where Uganda’s regional competitors come short on attractions, they quickly close the gap through aggressive marketing and improved services to sell their destinations.

Amos Wekesa, the executive director of Great Lakes Safaris and Uganda Lodges, for instance told The Independent on March 19 that Kenya spent the entire current UTB budget on the just concluded Berlin tourism fair tar getting the German market alone.

He said the Kenyan government takes its tourism industry seriously and there are plans to fund the Kenya Tourism Board to the tune of $70m in the next couple of years. And the returns have been big. Kenya and Tanzania are now generating $ 4.5 billion and $ 3.4 billion from their tourism industry respectively.

Uganda’s branding mess

But Ugandan experts also point out that even when the government has attempted to come up with a marketing campaign for the country, the promotions have been quite disjointed, sporadic or undone by unfavourable policies and laws.

“One of the issues that affect the image of the country is how a country defies itself, its product its security and its policies that could affect incoming tourists,” says Babra Vanhelleputt, the chairperson of the Association of Uganda Tour Operators (AUTO).

“If we can identify what our brand and flagship products are, it will be easier to craft a message that we can portray to the rest of the world about Uganda. With a certain level of consistency, we will find ourselves beginning to get the image and brand of Uganda cleaned to an extent.”

For now, it is not clear whether Uganda’s tagline is ‘Africa’s friendliest country’, ‘Gifted by Nature,’ ‘Irresistible Uganda’ or simply ‘The Pearl of Africa.’

Vanhelleputt says it appears Uganda is running along two tag lines: the ‘Pearl of Africa’ and ‘Gifted by Nature’ which is confusing. Tourism experts say the failure to brand Uganda as a destination of choice in key source markets is the biggest challenge facing Uganda’s tourism industry. They insist that it is only through positive publicity that Uganda can attract many more tourists in the coming years.

Vanhelleputt says this has partly occurred because Uganda has so many products the warmhearted people, the Mountain gorillas, the equator, the snowcapped Rwenzori mountains and the Source of the Nile and as a result, it is still hard to pinpoint which is Uganda’s flagship tourist product.

“This is something UTB needs to define urgently,” she notes.

Geoffey Baluku, a tour and travel operator and member of AUTO, agrees with his col league. He says this is the time for Uganda to get an enduring brand and image as our counterparts have done. For instance, he said although we all know that Uganda has more Mountain Gorillas than Rwanda, the world knows that Rwanda is the ‘Gorilla Country.”

Derrick Waiswa, another tour operator, says it is not by mistake that Uganda’s regional competitors are reaping benefits after investing massively in their tourism campaigns.

He says there is no way you can market and attract attention if you have not clearly cut out what exactly you are selling and attracting people to buy. Kenya has ‘Magical Kenya,’ India has ‘Incredible India’ – it is these catchy phrases that have drawn masses to these destinations.

Waiswa argues that although tourist numbers have been growing steadily even with Uganda’s meagre budget, it only means one thing: with a bigger budget, tourist numbers would even go higher.

Minister Mutagamba agrees, noting that $2m is still at the lowest in comparison to Uganda’s neighbours.

She told The Independent recently that the government gave UTB about Shs 5 billion ($2m) but it seems most of it went to salaries. The only thing UTB did was to organize the Africa Tourism Association (ATA) World Congress where about Shs 800m was used to market Uganda in the US.

She said what has been lacking in the past is a real marketing strategy, which she is now demanding from UTB.

Edwin Muzahura, UTB’s marketing manager, said they are working on it. He said over the next three years, they intend to commit $ 1.5m to market Uganda in three important source markets [North America -Canada and USA- the UK, and the German speaking countries of Germany, Austria and Switzrland].

This, he says, would ensure that Uganda’s image is consistently reinforced because most of the effects the country is currently grappling with now are due to perceptions and misconceptions. “We expect returns in about three years,” he says.

Although UTB officials are relieved with the recent jump in the organisation’s budget, they still think Uganda should have a “respectable budget” of around $10m specifically dedicated to marketing the country’s tourist attractions every year.

Source : The Independent

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