Hospitality sector can drive economic recovery

Holiday Inn Harare general manager Mr Clive Chinwada was last month elected the Hospitality Association of Zimbabwe (HAZ) president at the association’s annual general meeting. Our Business Reporter Ishemunyoro Chingwere engaged Mr Chinwada on the state and prospects of the hospitality industry. Read on ...

Q: What’s your impression of the hospitality industry as you take over the presidency?

A: As I assume leadership of the Hospitality Association of Zimbabwe, my take is that the fundamentals for the growth and success of the hospitality industry are in place given the warmth of our people, (and) the natural resource endowments. The country has to attract visitors.

To some extent, property owners have made investments in hotel infrastructure. It is important to note that the hospitality industry has been experiencing recovery and growth since 2009. Occupancies attained their best levels in 2018. During the same time, a lot of hoteliers have also been upgrading their properties. However, for two reasons, the hospitality industry still needs to be nurtured more so that the economic benefits can be more pervasive.

Q: What are these two reasons?

A: Firstly, the growth experience has been uneven. Some key destinations that should generally be stronger are not as competitive as they have been in the past, especially when you look at the glory years of 1997 to 1999. In fact, outside of the Victoria Falls and the country’s major cities, the performance of the industry remains below par. The Eastern Highlands, Masvingo and Kariba for instance, key destinations on the Zimbabwean hospitality and tourism circuit, are performing below optimal levels. We, therefore, need to find ways of ensuring that demand for hospitality services is stimulated in all the country’s tourism regions.

Secondly, when compared to 2018, the current year has seen occupancies declining. When you then look at what is happening across destinations, this becomes a source of worry. For instance, this year, Harare alone has lost over 60 000 room nights. This is a significant decline, which we hope will be reversed going into 2020. Whilst we are not alarmed as a sector, we are concerned. As a result, we urge Government to take all the necessary steps needed to restore confidence in the country. In the recent past, the country has not attracted good publicity, which we need to work on as a nation in order to improve the industry’s prospects.

Q: Government has identified tourism as one of the low hanging fruits that can drive economic revival. Do you think the hospitality industry is geared to help achieve this? lf not, what can be done?

A: The hospitality industry can indeed provide impetus to economic recovery. This is because as an industry, we currently have excess capacity in terms of room occupancy. National occupancies are below 50 percent, yet in a relatively short period of time, we can begin filling up that capacity. Like with any fruit tree, hospitality requires nurturing.

Q: How then can we “nurture the tree” and allow it to reach its potential?

A: We are in constant liaison with Government to look at the licensing and taxation regime for the industry, which we feel erodes competitiveness. Our research as an industry points to about 22 different licence fees and taxes that the industry has to contend with. This throttles competitiveness. The regulation by the central bank, around forex retention to the hospitality industry, also has to be reviewed.

Currently, it is difficult for the industry to save its hard-earned forex to build refurbishment reserves and reinvest in the product. Yet, this is the only way for the facilities to be able to offer products that meet regional and international benchmarks. Therefore, for the industry to realise its potential, there is need to create conditions that make tourism thrive. We have to improve the country’s ranking on the Global Tourism Competitiveness Index.

We also have to look at the development of tourism-supporting infrastructure such as primary and secondary airports, as well as the quality of the road network and the density of the same. The Travel and Tourism Policy has to be well grounded and supportive of an economy that is hungry to receive visitors through making it easy to access the Zimbabwean visa, as is the case in our region where countries that are succeeding in luring visitors, countries such as Mauritius, South Africa and Kenya.

Government funding to the Zimbabwe Tourism Authority needs to be much stronger. Our approach to Meetings, Incentives, Conventions and Events (MICE) has to be more aggressive. South Africa has benefited immensely from hosting big international events.

This requires high levels of cooperation between the Government and the private sector. The general macro-economy also has to be more enabling. In addition, the level of confidence in the country, both at home and abroad, must improve.

Q: There have been concerns over hotel room capacity, which is said to be low. What are the investment plans to cover this gap?

A: The statement by the Permanent Secretary in the Ministry of Environment, Climate, Tourism and Hospitality Industry, with regards to room capacity, needs to be contextualised. Government’s vision is to attain an upper middle class economy by 2030. The comments by the permanent secretary were to the effect that when this vision is attained, the country will face a deficit in hotel room availability. This is true.

However, if you look at current occupancies, the majority of our destinations actually have an oversupply of rooms. The strategic impetus by both private players and Government should, therefore, be on how to harmonise predicted future hotel room needs and the current situation, where we seem to have an excess.

Over and above this, as an industry, our thrust is also on improving the product quality. Therefore, a lot of property owners are currently investing money in one way or the other to upgrade existing infrastructure. In addition, we believe the implementation of the Zimbabwe Investment Development Agency Bill will reduce the hurdles that investors are currently facing when starting businesses in the country.

Q: Arrivals have generally been on the up in recent times, but there has been little corresponding upward movement in terms of receipts. What is the reason behind this and what do you intend to do to address that?

A: There is complexity in trying to answer that question, but as you know, Zimbabwe’s economy is highly informal. As a result, even in the hospitality sector, there are thousands of lodges, homes, bed and breakfast facilities that are dotted around the country. They receive significent tourism revenue, but due to the nature of their operations, this revenue is not formally reported.

In addition, we have lots of people living outside the country. They still visit friends and relatives when back home. They are classified as tourists, even though their expenditure (does not directly flow into the industry’s coffers). Work currently happening on the Tourism Satellite Accounting will help monitor the industry’s receipts.