Tourism $5bn target faces hurdles

HARARE - Tourism ministry’s aim to contribute $5 billion towards the country’s gross domestic (GDP) product by 2018 faces new hurdles posed by government’s  restrictive policies.

Last year, Zimbabwe introduced 15 percent value added tax (vat) on foreign receipts, a move tourism operators say is making the country an expensive destination.

Glenn Stutchbury, chief executive of Cresta Hotels said the imposition of vat will effectively increase prices by 15 percent and this will unquestionably make the country uncompetitive, and result in reduced numbers of tourists visiting the country.

“Such a development would be a setback for an industry slowly climbing out of a decade-long recession and would hinder the travel and tourism sector’s drive to increase visitor arrivals and thereby increase foreign currency earnings by the sector,” he said.

Tourism stakeholders last week urged the Finance ministry to reverse its decision to extend the vat on accommodation services for non-resident tourists and called for government intervention on infrastructure development.

“Tourist arrivals from South Africa are already on the decline following the weakening of the rand against the US dollar and the vat on non-resident guests will worsen the situation,” said a Hospitality Association of Zimbabwe official, Jonathan Hudson.

“We had already made rates for 2014 (when the budget was announced) and had not factored in the 15 percent tax meaning that our earnings will fall similarly as government is going to demand its dues.”

Clement Mukwasi, tourism executive said the sector is anticipating a negative reaction from its source markets.

“Tourists had already budgeted to come here and suddenly they are hit by a 15 percent increase. We are going to have a lot of some negative reaction from them,” he said.

Hotelier and African Sun chief executive Shingi Munyeza said there was need for government to improve the deteriorating infrastructure in the country and to revive the national airline as a way of making Zimbabwe accessible to many foreign tourists.

“We have to aggressively market Zimbabwe as a premier tourism destination, hence the need to holistically package the country in a way that attracts tourists to come and spend more days here,” he said.

Zimbabwe’s tourism sector — which took a knock between the year 2000 and 2008 due to international travel bans imposed on the country — began to improve significantly in 2009 following the establishment of a government of national unity.

In the subsequent years, the government supported the sector through investment in infrastructure and other initiatives such as incentivised tax systems and support funding through banks with external lines of credit for the tourism sector to specifically upgrade property.

The provision of duty rebates on upgrades to properties was acknowledged as a sign of a mutual and beneficial relationship between Zimbabwe’s private and public sectors in tourism. In 2012 the southern African nation adopted an open skies policy that saw more than 12 regional and international airlines reintroducing flights to the country.

The holding of the United Nations World Tourism Organisation summit in Victoria Falls last year resulted in massive infrastructural development in the resort town. Ross Kennedy, the chief executive for Africa Albida Tourism, commended government’s initiative to extend the tourism rebate regulation, which he said would give the tourism industry a significant injection of momentum and support.

The extension of the tourism rebate regulation applies to the import of capital goods for tourism projects and is a significant incentive for those involved in tourism to take the opportunity to upgrade and refurbish their products, properties and associated projects. 

Tourism’s contribution to the economy is expected to grow to 15 percent by 2015. In 2013, the sector improved by an estimated 3,4 percent.

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