THE introduction of a 15% value-added tax (VAT) regime targeting tourism has had adverse effects on a sector that has the potential to drive Zimbabwe’s economy, as well as spruce up the battered national brand. Zimbabwe Independent Business Reporter Tinashe Kairiza (TK) spoke to Hospitality Association of Zimbabwe (HAZ) president George Manyumwa (GM) on the implications of the tax law on tourism and how players in the sector are staying competitive in a tough economic environment.
Find below excerpts of the interview.
TK: Government introduced the 15% value-added tax on tourism last year, what has been the impact of this tax regime on the sector?
GM: The introduction of the tax unfortunately resulted in an increase in the service rates in the tourism sector and reduced profitability due to a decline in demand. The occupancy rates have remained stagnant at an average of 50%.
TK: At the time the tax regime was introduced, there was an outcry from tourism players against the tax announcement. How is Zimbabwe’s tourism product competing with other countries in the region?
GM: The tourism product in Zimbabwe is now generally more expensive than those in neighbouring countries and is therefore less competitive.
TK: Do you think government has introduced sufficient incentives to support tourism players to invest more in the sector?
GM: We hail the government’s support for the sector, such as duty-free imports of new vehicles for tour operations. However, we feel there is more government can do to support the hospitality industry through initiatives such as waivers on restricted goods under Statutory Instrument 64, that are not available locally, but fall within the classification of restricted goods. These include olive oil, which is a key ingredient in hotel menus.
TK: Let us talk about the acute liquidity crunch the country is currently reeling under, how is this impacting on net tourism receipts?
GM: The liquidity crunch is restricting spending, as less money circulates. The domestic market resorts to buying basic commodities. The liquidity crunch also limits corporate firms from travelling for business and this has a negative impact on net tourism receipts.
TK: What strategies are tourism players adopting to stay afloat under such liquidity constraints?
GM: The use of plastic money has been a key strategy to enable payment for services. Value-added services to widen the market are innovations that players are currently implementing to stay afloat. The country continues to market itself as a destination of choice through private initiatives and those of the Zimbabwe Tourism Authority (ZTA) to continue to develop the foreign market against a background of a constrained domestic market.
TK: Over the past decade, tourist arrivals from the West dipped. Are we witnessing any improvement on arrivals, and are there efforts to publicise the Zimbabwean tourism brand in new markets?
GM: The Victoria Falls has recorded an increase of about 14% in tourist arrivals this year compared to last year, as a direct result of marketing efforts by Zimbabwe Tourism Authority and hospitality industry players, as well as an increase of the number of flights landing at the new airport. We would want to applaud government for the refurbishment of the Victoria Falls Airport.
The tourism industry participates in various international tourism expositions in which attractions and services for tourists are showcased in events such as ITB in Germany, WTM in London UK, Indaba in South Africa and our very own Sanganai/Hlanganani World Tourism Expo that was successfully held just two weeks ago in Bulawayo, where travel agents from across the globe discussed business with local service providers.
TK: Early this year, the then Tourism minister Walter Mzembi noted that the heavy presence of police roadblocks across the country was hurting the tourism sector. How big a problem was this?
GM: The reality of the roadblocks is that tourists felt unwelcome into the country when they were penalised for offences unfamiliar to them. Anyone visiting a foreign country would be terrified when informed that they have broken the law because you would not be familiar with your rights and as a result, fear the worst. The most affected market that has since declined is that of self-drive tourists, whose form of tourism benefitted various parts of the country, as they spend more when they tour Zimbabwe, thereby spreading the tourist dollar across the economy. Some indicated that they thought there were safety concerns resulting in the need for heavy police presence, implying that Zimbabwe might not be a safe destination.
TK: Let us talk about the new Univisa launched jointly by Zimbabwe and Zambia. How has it stimulated travel and the free movement of tourists between the two countries?
GM: Transboundary initiatives such as the Univisa have the net effect of improving the attractiveness of destinations by enhancing easier access to more activities in a single visit. It means Zimbabwe benefits from the day-visitor tourists that have visited Zambia, but prefer to also have a sight of the Zimbabwean side of the mighty Victoria Falls, hence giving spill off benefits. This is through the convenience of not having to apply for a visa at the border or from the home region.
TK: Do you think Zimbabwe should forge similar arrangements with other countries to stimulate tourist arrivals?
GM: As the industry, we prefer no restrictions to any tourist at all. It is important to realise that getting a visa is not only about the fee, but in some cases the cost of applying extends beyond the visa fee, which in turn reduces the money that the tourist could have spent in our members’ facilities in the hospitality sector.
TK: Let us talk about how our tourism facilities compete with other countries in the region, would you say there is need to spruce up our facilities?
GM: Technology has seen the production of new gadgets and equipment that are making hospitality services more cost efficient in other parts of the world where the technology is accessible. We have unique products in Zimbabwe that we can use to position ourselves in the global market. They do, however, need to improve on the quality. The major challenge is that our local manufacturing industry is constrained with resources to import new technology that will result in the local manufacture of quality beds, sheets, and other equipment. The liquidity crunch hampers revenues that can be used to re-invest in product improvement. A significant number of our tourist facilities indeed require facelifts, renovations and upgrades.
TK: How would you describe your tenure as HAZ president?
GM: My tenure at the helm of HAZ has been characterised by economic challenges, punctuated by a liquidity crunch and cash shortages. I must also point out that our use of the greenback has made our tourism product uncompetitive in comparison with other products in the region. These challenges had the net effect of negatively impacting on domestic tourism.Inspite of these challenges, there has been some improvement due to trade shows and the intense marketing efforts driven by ZTA. For example, occupancy levels in Victoria Falls have significantly improved this year compared to last year’s figure. Notably, HAZ membership has increased sharply. Apart from suppliers who can affiliate with the association, we now have individuals joining as members.
TK: When are you holding your annual congress?
GM: We are holding our annual congress in Nyanga from November 22 to 24. The congress is being held under the theme: Embracing ICTs for Competitiveness in Zimbabwe Hospitality. The new tourism minister Edgar Mbwembwe and ICTs minister Supa Mandiwanzira will be attending the congress giving those who will come to the congress a good platform to interact with them.
Fact File: George Manyumwa </strong
- Current HAZ president;
- Zimbabwe Council of Tourism vice-president;
- Zimbabwe Parks and Wildlife Management deputy director-general;
- Sits on the Advisory Board of Chinhoyi University of Technology;
- More than 25 years’ experience in the hospitality industry; and
- Has held various managerial positions in African Sun, Innscor Africa, Rainbow Tourism Group as well as hotels in Nigeria,
South Africa and Namibia.