Windhoek-According to the latest FNB and Federation of Namibian Tourism Associations (FENATA) Travel Index results, the third quarter of 2016 recorded real growth of 3.4 percent compared to the third quarter in 2015. In nominal terms, however, growth rate edged to 11.5 percent over the same period indicating the strong inflationary impacts that can skew the Index.
The growth in the Index was supported mainly by a weaker domestic currency, which made travel to Namibia cheaper for both European and American tourists after the Namibia Dollar continued to depreciate. The report shows that the bed occupancy Index edged higher to 10.4 percent quarter-on-quarter (q-o-q) while increases in the load factor by 26.7 percent q-o-q was experienced as more passengers traveling into the country supported the overall positive growth.
The FNB/FENATA Travel Index, which is compiled by FNB’s Market Research Manager, Daniel Kavishe, is composed of exchange rates, tourist arrivals and room occupancy rates deflated to incorporate increasing local prices. These figures are indexed and weighted to approximate the business climate in the tourism sector. An opinion survey is further conducted to augment the results. The opinion survey index is scaled between -10 for extremely negative and 10 for extremely positive.
According to the survey, 58.9 percent of the respondents recorded an improvement in business as attested by their perception of tourist arrivals which moved up to 3.9 from 1.2 Index points. With tourist arrivals on the increase, and a weaker domestic currency, 61.2 percent of the respondents noted good revenue flows. The positive increase in market activity is further corroborated by additional hires with 33 percent of respondents stating they had to increase their labour force – implicitly to cater for more business. This was the experience of the owners of lodges and with the tour operator facilitators.
“In terms of capital expenditure, 51.5 percent of respondents stated that they increased capital expenditure during the third quarter to cater for repairs, replacements and new investments. This is often common during the third quarter as the winter season calls for additional business reinvestments based on previous third quarter surveys,” read the report.
Looking forward, the Sentiment Index points towards a more positive fourth quarter. The index edged up to 3.5 up from 1.8 a year ago mainly on the back of an expectation that tourist arrivals would increase over the final quarter of the year.
“The fresh air of optimism in the market is to be expected at this time of year with local business gearing for the festive season and as revenue windfalls trickle in. 61.3 percent of respondents expect ‘good’ revenue in the fourth quarter, up from 45.1 percent last year. The positive sentiments carried through to employment, after future employment prospects climbed to an all time high. Just over 21 percent of the respondents expect to increase the level of employment at their premises while 70 percent stated they do not expect their numbers to change. Most of the results corroborate with expectation that business performance should either be ‘good’ or ‘very good’ in the fourth quarter as compared to the fourth quarter of 2016.
In terms of challenges faced by the sector the report indicated that deep seated obstacles based on: poor and inexperienced staff, lack of readily available capital for investment, and the high costs of operations.