Interview: Tourism sees double inflation tragedy

Tourism Business Council of Zimbabwe president Wengayi Nhau

ZIMBABWE’S tourism industry says it is worried about rampaging United States dollar (US dollar) inflation. Executives in the sector say they want authorities to act swiftly before the sector tumbles into another crisis only three years after coming out of pandemic-inspired hard lockdowns. In this interview with Tourism Business Council of Zimbabwe president Wengayi Nhau (WN), our senior business reporter, Freeman Makopa (FM) asks him what the industry and government are doing to ride out potentially deadly headwinds. Find below excerpts from the interview.

FM: Tell us about the occupancy rates in hotels

WN: We are currently sitting at around 80% of 2019 occupancy levels. The year 2019 was the period immediately before the first lockdown introduced to fight Covid–19. Places like Victoria Falls, which were nearly deserted, have attained an 80% recovery rate. We project that we will actually surpass and attain the 2019 figures by this time in 2024.

 FM: What are the major concerns confronting the sector?

 WN: The major concerns revolve around our currency. It is a very complicated situation. We have a Zimbabwe dollar that is unpredictable and volatile. In order for suppliers to cushion themselves, to be able to replace their stocks, they have been forced to increase United States dollar prices. We now fear that even if we are running away from Zimbabwe dollar inflation, we might actually end up with US dollar inflation. In the last few weeks, we have been experiencing increases in US dollars prices. Previously, we were experiencing increases in the price of goods and services in Zimbabwe dollars, which was primarily a movement on the exchange rate. So, this is the tricky…US dollar inflation is much more dangerous than local currency inflation.

FM: Are you happy with the diversified attractions? Can anything be done?

WN: Look, Zimbabwe is a big country. Some Europe countries would be a small part of Zimbabwe, they may even by part of one province. If you have to take 10 provinces that we have, they may translate into 10 countries by European standards. You may go to an area like Mana Pools, where the impact of high traffic would result in loss of the prime destination status of that particular destination. In the context of Mana Pools, yes, there is a need for us to prioritise low numbers and high yields. But there is still potential for growth in our major cities. We need to concentrate on marketing big cities. We have some destinations that we still think are virgin destinations. In the Eastern Highlands, there is potential for the development of a blended product, where on one hand you have a high-volume product, and a low volume product.

FM: How will the rehabilitation, or reconstruction of aerodromes affect the tourism industry?

WN: Air transport remains one of the main key enablers in the industry. We have a wide variety of choice of modes of transport like railway, high-speed trains and other executive airlines. If we were to develop this destination, we need to make sure we maximise our air accessibility to every part of the country.

This will mean people will have an option of either flying or driving to those destinations. Some of the countries that are our source markets have less than two weeks holidays per annum. When they travel, they want to maximise on experiencing the destination in a short period. They want to use the shortest possible means of transport. Revamping aerodromes is going to improve accessibility to different destinations. We applaud the move. When we have efficient air transport, arrivals increase. We have seen remote areas that have been accessible of late via small charter planes, which take tourists straight into the different destinations.

FM: Tell us about emerging opportunities in the industry.

WN: Tourism industry remains one of the fastest-growing employers in the country, and globally.

It is no coincidence that it is growing at the same rate at which the rest of the world is experiencing growth.

Countries that have gone through the same challenges as us have managed to re-launch their economies and re-develop using tourism as a springboard.

Investment in tourism is key. There is a generation that does not fully understand the tourism value chain, and it is our duty and responsibility to make sure they understand, because they will only be able to partner the sector when they understand it.

We are engaging the financial service sector so that they understand this. For us to grow the tourism sector in terms of investment, we need banks. Some of the projects and programmes that we undertake require capital.

FM: Experts believe that the sector requires grants for it to get back to glory days. What's your take on these views?

WN: There is a statement that I always use, first one out, and first one in. When I say the first one out, when there is a problem such as a pandemic or civil unrest, the tourism industry is the first one to go out of business. But when there is stability, it is the first one in. If we were to use Covid-19 as an example, we experienced a complete shutdown of the tourism sector. But immediately when the government fully relaxed pandemic restrictions, we started experiencing growth.

Grants would work for a certain period of time to allow for growth and recovery. If there were no grants, we may have enough loans that are of a longer tenure with a grace period of at least two or three years to allow for recovery and reinvestment of the capital.

This allows businesses to grow before we commit to repay the loan. That is what I think would work in an environment where there are no grants.

FM: Players in the industry are of the view that taxes are too high. What is your take on that?

WN: Look, there are so many taxes in the form of licences. They are not sustainable. Apart from just the cost, it is also the administration of such taxes that gives us a real challenge.

We have always been calling and we still continue to call and knock on the doors of government to streamline and harmonise the tax regime so that the tourism sector can be competitive.

We are perceived as an expensive destination because taxes and licences play a big role in costs. There is need to revisit our licence regime.

FM: We hear that there are plans to construct hotels at major airports.

WN: We do not seek to reinvent the wheel, but if we were to go by international and regional best practices, we are one of the few countries in the world with no airport hotel.

An airport hotel is very ideal. It is one of the key requirements for an airport to remain a competitive destination. So, when airlines want to travel to a destination, they consider an airport hotel because airlines want to accommodate their crew near airports.

FM: In our last interview, you mentioned that there are some tourist attraction areas which are untapped, which have the potential to bring in more revenue. Can you give us an update on that?

WN: When you talked about the government constructing and refurbishing aerodromes around the country, it is one of the responses that government has given us because we need those places to be accessible before we can realise their full potential. 

They are going in as government through the Airport Company of Zimbabwe, redeveloping the aerodromes, refurbishing and in some cases building new ones.

That is a response that government has given us through their respective agencies —  Civil Aviation Authority of Zimbabwe and Airports Company of Zimbabwe.

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