Kenya Airways: The future may be bright?

Kenya’s Tourism Cabinet Secretary Najib Balala once again expressed his views that the country’s tourism industry is heading for brighter times ahead, when revealing the various statistics for the 2015 arrivals at the airports of Nairobi and Mombasa and the various land borders with mainly Tanzania and Uganda.

He was however quick to also speak words of caution aimed at the political opposition which increasingly violent protests, instigated by well insulated party leaders, have led to negative headlines about the country in recent weeks, endangering tourism recovery.

The key elements of the briefing given by Cabinet Secretary Balala show both ups and downs in various key markets. The UAE, Nigeria and South Africa show a sharp upward trend but other markets show declining numbers raising concern in the corridors of the Ministry and the Tourism Board.
Balala also announced a spending package for regional and continental marketing worth 1.5 million US Dollars, aimed to claw back lost numbers and position Kenya as a prime destination in East Africa, working hand in hand with national airline Kenya Airways.
 


‘The Cabinet Secretary had warned before about the impact of opposition demonstrations getting out of control and leading to a reversal of gains made over the past six months. What is also very concerning is the constant bad talk about our national airline. Let me be clear, without Kenya Airways our connectivity would suffer greatly and African and regional arrivals would drop even further. Some of our people, including association leaders, need to learn when better not to speak, and when they speak they do so with tact and balance. If we are seen to constantly bicker, what message does that send to our overseas markets. They pick up bad opinion pieces on social media and use those against us, that much is clear’ said a regular contributor from Nairobi when discussing the data published by the Ministry of Tourism.

Kenyan authorities released key data today:

RELEASE OF 2015 & JAN TO APRIL 2016 TOURISM PERFORMANCE RESULTS

ü An update on sector performance to inform on factors that have affected and/or driven the sector for the period under review
ü Need to leverage on the information to enhance the strategies for the sector recovery

Performance
Total international arrivals for 2015 by air and sea closed at 752,073 compared to 861,758 in 2014, showing a 12.7% decline.
JKIA arrivals declined by 9.5% to 672,789 compared to 2014 that had registered 743,600 visitors. Moi International Airport, on the other hand, received 75,983 visitors, compared to 117,796 in 2014, a 35.5% decline. 3,302 cruise ship arrivals were recorded in November and December 2015, compared to 362 all of 2014.
Provisional cross-border arrivals for the year under review declined by 29% closing at 428,473 compared to 603,869 in 2014.
As such, consolidated arrivals for January to December 2015 were 1,180,546 compared to 1,465,627 in 2014; a total decline of 19%.
Holiday is the major reason of travel into Kenya, taking a share of 71% of the total arrivals. Business contributed 12% of the arrivals, with Visiting Friends and Relatives (VFR), Conference and transit with 8%, 4% and 3%. The rest had 2%.

There is a notable decline in arrivals from these countries as shown on the table above, apart from UAE.
Tourism Receipts
ü Estimated tourism receipts for 2015 declined by 3% to record Kes. 84.6 billion compared to Kes. 87.1 billion in 2014. 2011 closed at Kes 97.9 Billion, 2012 Kes. 96.02 Billion and 2013 Kes 94 Billion, illustrating a consistent decline over the last five years.
ü In terms of dollars, a decline of 13% was recorded with US$ 861.6 million being the revenue realized in 2015 as opposed to US$ 989.6 Million in 2014. This fell short of 2014 receipts by US$ 128.1 Million.
ü Evaluating the performance in tourism receipts in Kenya shillings in isolation is misguiding. This is because the Kenya shilling performance is heavily influenced by the strength of the shilling which depreciated considerably in 2015. To mitigate this exchange rate anomaly, therefore, the figures should be evaluated in million dollar terms. Consequently, the loss of revenue in 2015 translates to Kes 12.6 Billion as opposed to the Kes 2.5 Billion deficit that presents itself.
Overview of January to April arrivals
Total international arrivals for January to April 2016 by air and sea closed at 263,284 compared to 231,038 in the same period in 2015, showing a 14% growth.
During the period under review, JKIA arrivals grew by 13.6% to record 229,594 as compared to 202,071 in 2015. Moi International Airport Mombasa (MIAM), on the other hand, received 31,810 visitors, compared to 28,967 in 2015, a 9.8 % growth. 1,880 cruise ship arrivals were also recorded.

INTERVENTIONS TO MITIGATE FURTHER DECLINE IN TOURISM
ü Charter Incentive Program – this program which is geared towards implementation of the tourism recovery strategy gives a subsidy of USD 30 per tourist and free landing fees for charter flights.
ü Re evaluation of park fees from USD 90 to USD 60 – Entry fees to Kenya Wildlife Service managed parks was reduced from a high of $90 to $60 plus VAT from 1st February 2016 and from 1st July 2016, VAT on the park entry fees will be scrapped.
ü Visa fees waiver for visitors under 16 years from 1st February, 2016 to encourage family travel and promote Kenya as a family destination.
ü Improved tourist inbound travel facilitation
o E-visa system
o Tripartite visa between Kenya, Uganda and Rwanda and Visa free travel by Interstate Pass for duly registered expatriates in those countries
o East African travel using the national identity card by citizens
ü Negotiation with governments to downgrade travel advisories (UK, Japan, Germany, France, Australia).
ü Investment in key Marketing and PR programs that translate into increased arrivals and destination brand profiling.
ü Investment in Market Research – in East Africa, Domestic and Emerging markets, for accurate needs assessment and understanding of market potential.
ü Brand Endorsement: high profile visits from hugely influential and globally recognized individuals as well as international platforms that have given Kenya global attention e.g. GES, MC 10, UNEA and upcoming UNCTAD, TICAD
ü National Classification of Accommodation Facilities and Restaurants –
The Tourism Regulatory Authority (TRA) rolled out activities on classification of accommodation facilities and restaurants in February 2015 and will be done before end 2016.
Increasing investment interest from Global Hospitality Brands with several thousand new beds in the pipeline for completion in 2016, 2017 and beyond, boosting MICE facilities.