Recession and inflation shake short-term travel
Wednesday December 07 2022
Local tourism industry agents are wary of a drop in demand amid declined economic growth in key traditional source markets and Covid-19 closures in China.
Kenya has been reliant on international source markets for visitors including the USA, North America, Europe and Asian nations.
However, the looming global recession and higher inflation in some of these countries are expected to weigh on consumer spending and tourism demand, and in turn, cut passenger bookings to and out of the country.
“As the recession affects those countries obviously travel will not become a priority. Kenya is also a long-haul destination. And while people may choose to travel local or short distances, the long haul will definitely take an impact moving forward,” said Kenya Association of Travel Agents (KATA) chairperson Shazmin Manji.
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KATA largely relies on outbound, enabling travel within Kenya, but sometimes sells inbound – outside the country.
The agents expect global happenings to have a spiral effect in Kenya with a slowdown in bookings.
The UK and Europe are staring at recession due to high fuel prices resulting from the Russia-Ukraine altercation, while the US faces a rise in unemployment.
China, which has been a growing tourist source region for Kenya due to bilateral trade ties between the two countries, has had tough zero- Covid policy restrictions, protests and a property slump that has seen it record slow growth.
The International Air Transport Association (IATA) statistics showed bookings for forward travel dropped from 47 per cent in September to 11 per cent in November, eight per cent in December, to one per cent in April, over slowed leisure and business travel and global meetings by governments, businesses and individuals.
This is also expected to translate to a reduced passenger load factor being uplifted from Kenya by the travel agents.
The forward bookings will tilt upwards from April 2023 and beyond when economies begin to recover and the rebound for travel will continue to increase.
”Because of the global recession, the cost of travel and the cost of the dollar has been very high. And so you will find that people will undertake fewer trips and the business travelers will also perform fewer trips,” said KATA chief executive Agnes Mucuha.
Some cities in China like Shanghai have been under lockdown for more than 100 days, with residents unable to leave the region and many forced to stay home.
This has triggered demonstrations that took place across 15 Chinese cities – including the capital Beijing and the financial center Shanghai.
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Despite Kenya not issuing any travel restrictions against China, KATA says it has lost about 30 per cent which forms the total sales to China due to reduced bookings as traders avoid trips to the Asian nation.
“We are missing that 30 percent,” Mucuha added.
The closure of China is expected to affect overall international sales and visitors coming from the country, amid a recovery in international travel.
However, the slowdown may not cause a huge disruption in the magnitude of Covid-19 levels.
In the eight months through August, the number of international tourists surged 89.1 per cent to 723,630 according to Kenya National Bureau of Statistics, compared to 382,619 in the same period last year.
In 2019, which was regarded as the best year of the sector, it registered over 2.04 million international arrivals.
China recorded 31,610 tourists in 2021 representing 30 per cent of the total number of visitors from Asia.
Travel agents have seen the alternative buckets that have emerged within Dubai, Istanbul and Ankara in Turkey, replacing the canceled China trips.
“The US is also performing very strongly and a lot of emerging cities from the Eastern Europe side,” Mucuha adds.
Domestic travel has been growing inching very close to getting back to the 2019 levels.
However, travel agents that constitute over 90 per cent of domestic travel faced a drag following the Kenya Airways (KQ) strike where the agents lost 50 per cent of sales.
The sector is expecting an emergence of high regional travel being facilitated by the African Continental Free Trade Area Agreement that was recently signed.
The recent visa regime allowing Kenyan passport holders to have a 90-day three visa into South Africa is also expected to push their activity.
“Kenyan traveler is looking beyond the traditional Dubai experience. That is a great option for the first-time traveler as a safe international destination,” added Ms Manji.
”But as they travel beyond and get more experience, they are looking for more to do. They are looking for more cultural experiences, more adventure, just like the international traveler. Value for money is also very important. And so being able to share and package and product data is critical.”
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