Focus on newly rich Asia to reap fruits of tourism

Tourists sample Kenyan delicacies at the Outspan Hotel in Nyeri. Stakeholders must invest heavily in human capacity, facilities to woo more visitors. Photo/FILE  Nation Media Group

By Robert Bunyi

In Summary

• Tourism is a labour intensive sector and higher overall visitor numbers will result in higher levels of employment both directly in tourism businesses and indirectly in the supporting sectors.
• To seize this opportunity, it is critical for the State and industry to clearly map out investments that need to be made to attract the emerging tourist of Asia and elsewhere.

Asia’s economy has by and large grown at a faster rate than the region’s population increase over the past three decades. The net impact of this trend has been a dramatic drop in poverty levels across the region.

Today in many corporate headquarters around the world, the emerging middle class households of Asia are correctly viewed as the new engine for profit growth.

Some fascinating statistics have been produced to illustrate this point. Consider that the total size of today’s global middle class is two billion and this is expected to more than double to 4.9 billion by 2030—16 years from now.

This increase will be largely due to the Asian middle class, who will account for 40 per cent of total global consumers by 2030. This trend is expected to remain a particularly strong factor in shaping tomorrow’s source markets for the world tourism industry, of which Asia will be the most important.

Assume that about 15 per cent of the middle class will be in a financial position to tour another continent and further assume something like 10 per cent of them actually do. That is 73.5 million new tourists looking for a holiday destination in 2030.

If Kenya was to target 2.2 million of them and they were to spend on average five nights per holiday, what would it mean for the tourism industry? We currently host less than two million tourists per
year.

Tourism as an economic activity is popularly perceived as hotels, airlines, airports, travel agents, leisure and recreation services, attractions, among others. These components are actually only the direct contributors to GDP of the tourism industry.

The World Travel and Tourism Council identifies indirect sources of GDP that tourism provides to include; investment spending in new facilities to increase capacity; government spending such as tourism marketing and promotion, transportation infrastructure, security services; and domestic purchases of goods and services, for example, purchases of food.

Others are cleaning services by hotels, fuel and catering services by airlines, and IT services by travel agents. Take the example of food purchases. Kenya is a producer and supplier of high quality food products to the world. The skills, basic infrastructure and land resources required to increase production exist.

An investment in marketing activity that yields more tourists on a sustained basis to Kenya from Asia would result in higher demand for locally sourced high quality food. Food processors would scale up
operations to meet the requirements of the visitors as well as locals.

Tourism is a labour intensive sector and higher overall visitor numbers will result in higher levels of employment both directly in tourism businesses and indirectly in the supporting sectors.

The nature of the bulk of tasks performed by individuals in the tourism business tends to be of a repetitive nature that is easily learnt on the job and on short courses. The benefit of this is that the absorption capacity of the industry is fairly elastic.

To seize this opportunity, it is critical for the State and industry to clearly map out investments that need to be made to attract the emerging tourist of Asia and elsewhere.

Investments in marketing are most probably the easiest but to really yield gains these have to be accompanied by infrastructure and security investments. The industry will need to invest heavily in human capacity, facilities, attractions and standards development.

Mr Bunyi is an analyst at Mavuno Capital.