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.... quote by Warren Buffett

tourism

Background

Kenya's prolific wildlife and white sand beaches have brought over one million tourists to Kenya in the past few years with 2006 recording an all time high of 1.8 million. In 2006 alone, the sector generated Ksh 56 billion, making it one of the country’s largest sources of foreign exchange. The sector has been re-establishing itself in the global market having faced a difficult period through 1997 to 2003 following political clashes, terrorist attacks and most recently post election violence in early 2008.

According to a study commissioned by the Tourism Trust Fund (TTF) titled Tourism Economic Impact Analysis, the sector contributed 2.4 per cent directly to the country’s GDP in 2005, totaling to Ksh 34.12 billion, and Ksh 43.91 billion, if indirect impact is added.

The hotel industry, a sub sector of tourism, has been thriving too with increased volumes to an extent of bursting as the country is currently faced with a shrinking bed capacity. The Nairobi chapter of Kenya Alliance of Hotelkeeper's and Caterers (KAHC), says in spite of the current successes in the tourism industry, the hospitality sector is still challenged by inadequate bed capacity. In order to sustain the growth that the sub sector is currently enjoying, they have requested the Government to reduce the current tax from 18 per cent to encourage further investment in the industry.

However, the Government has made strides towards this by exempting tax on imported goods for industry players who are investing in the industry. With a strong shilling and the tax holiday the sub-sector has an opportunity to develop itself and improve its facilities as visitors become more discerning on what they expect

With global travellers coming into Kenya, the hotel industry has been forced to invest in ICT, like Wi-Fi, to attract clients and improve their business operations. These investments contribute to the growth of the ICT sector in the country.

Growth in the sector is expected to continue into this year and beyond. Already the sector has shown improved performance, which is expected to even surpass the 2007 set targets. The sector has now shifted its marketing strategy from relying on high volume low yield tourism towards high yield tourists. This is expected to sustain the growth that has been witnessed since the recovery of the sector.

According to data from Kenya Revenue Authority the sector contributed Ksh 4.39 billion in taxes last year, a 66.9 per cent increase compared to the Ksh 2.63 billion that was collected the previous year.

According to Reuters, the numerous forays into Africa by US celebrities in recent months have raised Kenya’s profile there. Kenya’s biggest growth came from Eastern Europe, and particularly Russia, where Kenya Tourism Board (KTB) has aggressively targeted potential visitors.

At the labour market, the tourism sector has seen the figures jump up. A recent study shows that in 2005 the sector employed approximately 89,000 people directly, and with an annual average payroll wage and benefits of Sh390,000.

Meaning the amount of income paid to these employees in the sector accounted to 65 per cent of the sectors contribution to the GDP, Sh53.54 billion. These figures include taxes collected from lodges, hotels, tourist transporters, camping sites, tourist motels, and restaurants.

The increase of income tax, which is mainly collected from businesses in the sector, reflects a recovery in business as more people move to invest in this sector. With traditional players are also expanding their businesses to accommodate the growth.

Operations

70.71 Group currently works with existing market players and we are performing feasibility studies on the best approach to tap into a resurgent in the Kenyan tourism sector.

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