Corporate News
Insecurity resulted to a 60 per cent drop in bed occupancy at coastal
beach hotels and a 28 per cent drop in Nairobi’s high class hotels.
PHOTO | FILE
By VICTOR JUMA, vjuma@ke.nationmedia.com
In Summary
- All other sectors grew, leaving contraction of the tourism industry as the only drag on an economy that is projected to expand by 5.3 per cent in the full year.
- The hospitality sector, as captured in hotel bookings and restaurants, contracted by 14.6 per cent in the third quarter.
A deepening crisis in the tourism sector pulled
growth down to 5.5 per cent in the third quarter of 2014 compared to 6.2
per cent in the same period last year, official data released yesterday
shows.
“The contraction is attributable to both internal
and external factors, including insecurity concerns, negative travel
advisories by some key tourist source countries and the perceived health
risks in Kenya due to the country’s geopolitical location and
connectivity with West Africa,” the Kenya National Bureau of Statistics
(KNBS) said in a statement.
This resulted to a 60 per cent drop in bed
occupancy at coastal beach hotels and a 28 per cent drop in Nairobi’s
high class hotels, deepening the negative growth of 3.9 per cent
recorded a year earlier.
Official statistics show that absolute tourist
arrivals dropped 14.9 per cent to 998,069 in the seven months ended July
31 compared to 1.1 million the year before, underlining the industry’s
troubles.
Tourism, which accounts for 1.6 per cent of all
economic activity, also supports related industries that are suffering
from its slowdown. Parks, tour firms, retailers and airlines are among
the major losers from the slump in the hospitality sector whose earnings
topped Sh100 billion two years ago.
Tourism revenues fell two per cent to Sh96.02
billion last year on the back of a drop in visitor numbers by 29,000
from the 1.2 million arrivals recorded the previous year.
The steep drop was attributed to advisories issued
by Western governments ahead of the March 4, 2013 election that many
feared would culminate into violence similar to the 2008 mayhem in which
more than 1,300 people were killed and 600,000 others displaced.
Fresh travel warnings against Kenya were issued in
the wake of major terrorist attacks, including the Westgate incident in
September 2013.
The outbreak of the deadly Ebola epidemic in West
Africa has also hurt Kenya as a tourist destination because of its
perceived exposure arising from the country’s position as a regional air
transport hub. These challenges have left tourism as the Achilles heel
of a robust economy that is growing in key sectors.
The KNBS data shows that construction expanded by
the largest margin of 11 per cent in the third quarter, improving on the
8.6 per cent growth the year before.
“The sector’s resilience has been on account of
sustained real estate development and infrastructure development by the
government,” KNBS said, noting that cement consumption increased 11.1
per cent in the period to reflect the sector’s performance.
Financial services came in second with a 9.9 per
cent growth, up from 8.3 per cent in the same period last year. This
signals the steady rise of financial services sector in the economy.
Finance has in the past five years grown relatively faster alongside
other services to outpace traditional sectors like manufacturing and
agriculture.
The sector’s latest performance was driven by
increased trading at the securities market and lending to government
that saw the stock of domestic debt rise 3.7 per cent to Sh2.1 trillion.
ICT came in third with a 6.6 per cent growth that was, however, slower
than the 14 per cent recorded in a similar period last year.
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