cgi click no. 2 february 2010 tourism sector outlook 2010
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Study on the domestic tourism sector and outlook for 2010. Review of the impacts of the economic crisis on tourist arrivals.TRANSCRIPT
CCCGGGIII CCCLLLIIICCCKKK No. 2 – February 2010
Zayd Soobedar
Credit Risk Underwriter 31/12/2009
TOURISM SECTOR OUTLOOK 2010
Dear all,
Following the warm welcome given to our 1st newsletter by the
various stakeholders back in December 2009, we have decided to
provide it with a more salient identity. As from now, our newsletter
will be known as CGI Click.
In line with our strategy to develop further awareness of credit
insurance, we provide you in the 1st section of this new issue with a
brief overview of our business as well as our company profile and
an introduction to the team behind CGI.
In the 2nd part of CGI Click, we elaborate on an analysis of the
tourism sector with emphasis on the 2009 performance and an
outlook for 2010.
Zayd, our economist, did a fantastic job on this survey and we are
proud to have him in our team.
And to conclude, as usual, YOU TRADE, WE COVER!
Johan Crabeels
General Manager
(On behalf of the CGI Team)
Disclaimer: CGI Copyright. While we have made every attempt to ensure that the information contained in this report has been obtained from
reliable sources, CGI is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in
this document is provided ‟as is‟, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this
information, and without warranty of any kind, express or implied. In no event will CGI, its related partnerships or corporations, or the partners,
agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this report or
for any consequential, special or similar damages, even if advised of the possibility of such damages.
2
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OVERVIEW OF CREDIT INSURANCE
Credit insurance is an invaluable aid to successful national and
international business-to-business trade. It covers the risk of
financial loss that can occur when trade credit is offered by a
business to its corporate customers – thus providing a set period of
credit after provision of products or services before payment is due.
In these circumstances, there is always a risk of non-payment, either
because the customer may be unable or unwilling to pay, or because
an unforeseen event prevents successful completion of the sales.
[Ref: Atradius]
CGI‟s business is to provide credit insurance to local suppliers for
both domestic and export markets. Credit insurance provides cover
to businesses against non-payment of debts owed to them by
business customers for goods or services provided on credit terms.
Main advantages of credit insurance for suppliers & traders
Professional management of buyers through credit limits
Protect cash flow & profits from bad-debt losses
Sell safely to new and existing customers
Secure Financing Terms
Enter domestic/international markets with confidence
Increase working capital availability
Reduce bad-debt reserves
Protect your trade
Better trading conditions
Enhanced security
Debt collection service
COMPANY PROFILE
Credit Guarantee Insurance Co. Ltd (CGI) was incorporated in
February 2009 with BRN C08078435. The shareholders are La
Prudence Mauricienne Assurances Ltee (60%) and The Mauritius
Commercial Bank Ltd (40%). Our technical partners are Atradius
and Atradius Re.
Overview of our shareholders
I. La Prudence Mauricienne Assurance Ltee
Turnover 2008 : Rs 806 Mn
Total assets 2008 : Rs 2.5 Bn
Market share stands around 6%
Reinsured by Munich Re (world‟s largest reinsurer)
Certified ISO 9001
Group is diversified into life and general insurance, leasing and fund
management
II. The Mauritius Commercial Bank Ltd
Leading bank in Mauritius with over 40% market share
2600 employees
Present in 8 countries
Net profit of Rs 4 Bn for 2008/2009 (+ 7%)
Capitalisation USD 1 Bn
Since 1838
Our technical partners
I. Atradius
160 offices in 42 countries
2nd largest credit insurer worldwide – 31% market share
Premium: € 1.8 Bn in 2008
80 years experience with
Database of 52 million businesses worldwide
22,000 limits issued per day
Nearly € 500 Bn turnover insured annually
Standard & Poor‟s rating A – & Moody‟s rating A3
II. Atradius Re
Long reputation as a leading reinsurer of more than 40 years in
Credit and Bond reinsurance on 5 continents
Standard & Poor‟s rating A - & Moody‟s rating A
Credit Insurance – our business
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The world economy faced one of the most severe recessions in decades during 2008/09. Global tourism, though resisting better
than some sectors, has not been immune. Markets started to deteriorate by mid 2008 and the effects were still strong in 2009.
As per the World Tourism Organisation (UNWTO), the downward trend in international tourism experienced during the last 6
months of 2008, has lingered during 2009 and international tourism dropped by 4% last year. However, as per the UNWTO,
there are possibilities of a recovery for 2010, but this will depend on the changing economic conditions and the restoration of
consumer and business confidence. Considering the high responsiveness of the domestic tourism market to changes in global
travel and the subdued economic outlook in our main source markets in particular France and UK, the outlook for the Mauritian
tourism sector for 2010 is rather favourable, with the industry expected to renew with growth after the sharpest contraction on
record experienced in 2009. Our arrival estimate for the current year stands around some 915,000 tourists. To brace against the
impact of the crisis, the government has implemented several measures detailed mainly in the Additional Stimulus Package (2008)
and the Budget 2009/10. At micro level also, hotels have applied internal measures and initiatives to counter the fall in tourist
arrivals and low occupancy rates. In the case of a prolonged stressed (another poor peak season in 2010), some hotels might
start facing risk of default, especially hotels recently set up are more prone to the risk of failure. In terms of employment, the
number of job losses in the industry has not been critical for the period March 2008-March 2009, in line with government‟s policy
for job retention and preservation for the sector, but same has started to pick up again in 2010 with many hotel groups recruiting
employees. Regarding the future of the global tourism industry, all major stakeholders worldwide are adamant on the long-term
prospective and high potential of the tourism sector after the effects of the financial crisis fade away. However, the timeframe is
not yet properly defined due to the high level of uncertainty in the market, even though 2010 is likely to be a promising year for
the global tourism industry. On the domestic front, the AHRIM is also confident regarding future prospects of the industry and
the Board of Investment forecasts 1.5 million tourist arrivals by 2013.
Zayd Soobedar
Credit Risk Underwriter
Wednesday, 10 February 2010
TOURISM SECTOR OUTLOOK
06 August 2009
6
Contents MAIN HIGHLIGHTS ........................................................................................................................................................................ 7
OUTLOOK OF THE TOURISM SECTOR FOR 2010 ....................................................................................................................... 8
Sharp downturn in international tourism during 2009 following global crisis… .............................................................................. 8
Measures to brace against the crisis… ............................................................................................................................................ 9
UNWTO Panel of Experts’ Confidence Index showing encouraging signs for 2010… .................................................................... 9
Global outlook 2010: dark clouds to fade… ................................................................................................................................... 9
Milestone for domestic market: abnormal growth “bye gone” as arrivals revert back to core trend…............................................. 10
The key risks to the outlook… ..................................................................................................................................................... 10
Employment in the sector outlook ................................................................................................................................................ 11
In case of prolonged stress… ....................................................................................................................................................... 11
Way forward: post-financial crisis… ............................................................................................................................................ 11
DRIVERS FOR TOURISM: DOMESTIC & WORLDWIDE ........................................................................................................... 13
Economic factors in main source markets..................................................................................................................................... 13
Image & Visibility in main source markets................................................................................................................................... 14
Air access liberalisation ............................................................................................................................................................... 14
Adequate infrastructure and room capacity to meet demand ......................................................................................................... 15
Consumer sentiment .................................................................................................................................................................... 15
SUMMARY OF KEY CREDIT STRENGTHS AND WEAKNESSES FOR DOMESTIC TOURISM ............................................... 17
KEY INDUSTRY STATISTICS ...................................................................................................................................................... 18
2009: A year of turbulence… ....................................................................................................................................................... 18
The imprint of volatility and crisis on main source markets …...................................................................................................... 19
Purpose of visit: MICE segment slackens… ................................................................................................................................. 19
Overview of main tourism industry statistics ................................................................................................................................ 20
Macroeconomic perspective: after highs, lows set in… ................................................................................................................. 20
Tour operators ............................................................................................................................................................................. 21
APPENDIX ..................................................................................................................................................................................... 22
A1. MEASURES TO BRACE AGAINST THE ECONOMIC & FINANCIAL CRISIS ................................................................ 22
International ................................................................................................................................................................................................................... 22
Domestic ........................................................................................................................................................................................................................ 23
REFERENCE .................................................................................................................................................................................. 25
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MAIN HIGHLIGHTS
International tourism fell by 4% yoy to 880 million in 2009 with international tourism receipts plummeting by
6% yoy for the period. However, the final quarter was marked by a 2% yoy growth. Same trend was followed
by the domestic tourism industry.
Overall, tourist arrival for Mauritius fell by 6.4% yoy to reach 871,356 in 2009.
Arrivals from Europe shrunk by 4.7% yoy to reach 579,508 guests, driven by the poor performance of our
main markets. Nevertheless, it is important to point out that our main source market, namely France,
showed buoyant results in the context of the global economic crisis with arrivals increasing by 6.0% yoy.
Contrarily to September 11 whereby the „willingness to travel‟ was dented, the crisis coupled with
uncertainty and health scares have adversely impacted on both „willingness to travel‟ and more importantly
the „ability to travel‟ of individuals worldwide (through negative wealth effects), covertly suggesting that the
timeframe for recovery might be longer than for 9/11.
As per the UNWTO, the focus should be on 3 main pillars (resilience, stimulus and green economy) to brace
against these challenging times.
The improved prospects for 2010 are confirmed by the encouraging steep rise in the UNWTO Panel of
Experts‟ Confidence Index for 2010.
After factoring in updated information from AHRIM, global trends in arrivals, impact of the financial crisis on
„willingness and ability to travel‟ of consumers and outlook for our main source markets, we estimate tourist
arrivals for the year 2010 to stand around some 915,000 tourists for the year, that is, a 5% yoy pickup
compared to 2009.
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Market dynamics in 2009
> Individuals travel to destinations closer to home. Inbound tourism is expected to be favoured to long-
haul travel
> Decline in average length of stay as well as expenditure
> Destinations offering value for money and with favourable exchange rates have an advantage as
consumers become more price- sensitive
> Late booking is expected to increase as uncertainty leads consumers to delay decision making and wait for
special offers
> Segments such as visiting friends and relatives,
repeat visitors, as well as special interest and independent travellers, are expected to be more resilient
> Business travellers tend to make fewer, shorter and
cheaper business trips switching from luxury extras in
favour of basic efficiency and good service.
International tourism 2009 performance
> Full-year results show that growth was negative in all world regions except for Africa, which bucked the
global trend: Europe (-6%), Asia and the Pacific (-2%), the Americas (-5%), the Middle East (-6%),
Africa (+5%)
> The upward trend of the last months of 2009 is also visible in the air transport data from IATA and
various regional airtransport associations. According to IATA, passenger traffic was positive since September
2009 after a year of declines.
> Hotel performance data for the first 11 months, as analysed by Deloitte based on data reported by STR
Global, also corroborates this upward trends – occupancy rates have started to post growth in some
key destinations which is a sign that the recovery has begun.
As in previous crises, consumers tended to travel
closer to home during 2009. Several destinations have seen domestictourism endure the crisis better and
even grow significantly. This was the case among
many other countries, of China, Brazil and Spain, where the domestic market, representing a large
share of the total demand, contributed to partially
offsetting the decline in international tourism.
OUTLOOK OF THE TOURISM SECTOR FOR 2010
Sharp downturn in international tourism
during 2009 following global crisis…
In 2009, the world economy faced one of the most
severe recessions in decades. According to the IMF
World Economic Outlook (October 2009), the
world‟s GDP was projected to decrease by some
1.1% yoy in 2009. Tourism, though resisting better
than some sectors, has not been immune. Markets
started to deteriorate by mid 2008. As per the World
Tourism Organisation (UNWTO), the downward
trend in international tourism during the last 6 months of 2008 has lingered during 2009. The first 3
quarters of 2009 registered declines of 10% yoy, 7% yoy and 2% yoy respectively. However, the final
quarter was marked by a 2% yoy growth, which contributed to quell the overall decline to 880 million
international tourist arrivals (-4% yoy) compared to the 920 million achieved in 2008. Based on the
trends through the first 3 quarters, international tourism receipts for 2009 are estimated to have
decreased by around 6% yoy. While this is unquestionably a disappointing result for an industry
accustomed to continuous growth, it can also be interpreted as a sign of comparative resilience given
the extremely difficult economic environment. This becomes more evident when compared with the
estimated 12% slump in overall exports as a consequence of the global turmoil.
Of note, shocks like September 11 and the financial crisis reengineer the dynamics of the market for a
while before readjustments. However, contrarily to September 11 whereby the „willingness to travel‟
was dented, the crisis coupled with uncertainty and health scares have adversely impacted on both
„willingness to travel‟ and more importantly the „ability to travel‟ of individuals worldwide (through
negative wealth effects), covertly suggesting that the timeframe for recovery might be longer than for
9/11.
The change in market dynamics has already affected Mauritius in the 2nd half of 2008. After a record
year in 2007 after expansion of 15% yoy, growth decelerated to 2.6% yoy in 2008 with tourist arrivals
reaching 930,456. Reflecting trends in international tourism, the 2nd half of the year was marked by a
pronounced slowdown in arrivals with the peak quarter witnessing a downturn of 2.2% yoy. The
downward trend persisted during the first 9 months of 2009. Tourist arrivals shrunk by 9.7% yoy to
608,885 guests compared to 674,174 for same period in the previous year. However, as per the CEO
of AHRIM, the “sector was facing difficult times but the drops in arrivals, occupancy rates and hotel
receipts appear to be stabilising.” This was confirmed by the last quarter‟s positive performance,
whereby tourist arrival growth stood at +2.4% yoy. Overall, tourist arrival fell by 6.4% yoy to reach
871,356 (same will be discussed further in the Key Industry Statistics section).
Figure 1: International tourist arrivals, 1995-2009
534
567
593610
632
682 682
702691
762
802
847
901
920
880
500
550
600
650
700
750
800
850
900
950
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Inte
rn
ati
on
al T
ou
ris
t A
rriv
als
(m
illi
on
)Year
9
Measures to brace against the crisis…
As per the UNWTO, the focus should be on 3 main pillars (resilience, stimulus and green economy)
to brace against these challenging times. As such, these measures are subdivided into 8 broad
categories (fiscal, monetary, human resource, marketing, travel facilitation, public/private partnerships,
environmental and transnational cooperation). So far, most countries have applied these measures.
Similarly, Mauritius has implemented all the above measures detailed mainly in the Additional Stimulus
Package (2008) and the Budget 2009/10. At micro level also, hotels have implemented internal
measures and initiatives to counter the fall in tourist arrivals and low occupancy rates. [Refer to
Appendix A.1 for further details]
UNWTO Panel of Experts’ Confidence Index showing encouraging signs for 2010…
As expected, given the turbulence experienced over the
past 12 months, the over 330 members of the UNWTO
Panel of Tourism Experts from around the world have
evaluated 2009 with a pretty poor score of just 71.
However, the average score given by these same experts
for 2010‟s prospects is 131, well above the neutral 100
and close to the level of the boom years 2004-2007.
Global outlook 2010: dark clouds to fade…
The International Monetary Fund (IMF) has just recently
stated that the global recovery is occurring "significantly"
faster than expected, as compared with its October
assessment which already counted on a clear return of
economic growth in 2010 (+3.1% worldwide, with
stronger performance for emerging economies at +5.1%,
alongside a more sluggish one for advanced economies at
+1.3%). Against the backdrop of both the upturn in
international tourism figures and overall economic
indicators in recent months, UNWTO forecasts a growth
in international tourist arrivals of between 3% and 4% in
2010.
Of note, domestic tourist arrivals high have always
outperformed international tourism over the past 15
years, except for 2009. There appears to be a high degree of correlation (0.98) between tourist arrivals for Mauritius and
international tourism. However, the responsiveness of domestic tourist arrivals to international tourism is 1.5 (based on figures for
1995 to 2009), implying that on average a 10% increase in international market is likely to yield a 15% hike in domestic arrivals (same
also applies for downsides as has been the case for 2009, whereby international tourism declined by 4% and arrivals for Mauritius
TTTHHHEEE BBBOOOXXX
UNWTO response:
> The UNWTO has classified
the measures into 8 broad
categories as follows:
1. Fiscal measures
2. Monetary measures
3. Human resources measures
4. Marketing measures
150
144140
137132
71
131
119
144140
136
143
98
71
25
50
75
100
125
150
175
2003 2004 2005 2006 2007 2008 2009 2010
Equal
YearProspects (before) Evaluation (after)
Better
Worse
Figure 2: UNWTO Panel of Experts’ Confidence Index, 2003-2010
International Tourist
arrivals
Tourist arrivals for
Mauritius
-10%
-5%
0%
5%
10%
15%
20%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Gro
wth
rate
%
Year
Figure 3: Relationship between domestic arrivals and international tourism travel,
1995-2009
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Outlook 2010
> CGI Research Team forecast tourist arrivals to
amount to around 915,000 (i.e. +5% yoy) for 2010 based on latest information, UNWTO projection and
outlook for our main source markets.
> World tourism expected to hike between 3% and 4% in 2010.
> Improvement in economic conditions in major source countries. IMF projects growth: France
(+0.9%), UK (+0.9%), Germany (+0.3%), Italy (+0.2%). This could contribute to restore consumer and business confidence.
Employment outlook in tourism sector
> Number of layoffs between June 2008 and June 2009 rather insignificant
> In several cases, contracts of expatriates not
renewed
> In case of prolonged stress, less experienced non-
managerial and manual workers prone to lose jobs
dropped by 6.4%). Based on the above relationship and in line with the global outlook for international tourism, domestic arrivals are
anticipated to recover.
Milestone for domestic market: abnormal growth “bye gone” as arrivals revert
back to core trend…
After factoring in
updated information
from AHRIM, global
trends in arrivals,
impact of the financial
crisis on „willingness and
ability to travel‟ of
consumers and outlook
for our main source
markets, we estimate
tourist arrivals for the
year 2010 to stand
around some 915,000 tourists for the year, that is, a 5% yoy pickup compared to 2009. We forecast
average occupancy rate to stand around 74% for the year.
The key risks to the outlook…
2010 provides several upside opportunities, while naturally not eliminating downside risks. On the positive side, the global economy
is recovering quicker than expected and business and consumer confidence have picked up. Interest rates and inflation are expected
to rise only moderately in the short term. In the tourism sector, the pent-up demand that generally follows a slump creates several
opportunities and there is scope for a revival among source markets which were hard hit in 2009 such as the UK or the Russian
Federation. Another factor that will brighten up 2010 is that there will be plenty of events to attract potential visitors – from the
Winter Olympics in Vancouver in February to the FIFA Football World Cup in June in South Africa and the Shanghai World Expo
from May through October.
On the downside, unemployment is the key challenge. The jobs crisis is not over yet, particularly in major advanced economies and
many valuable human resources are still at risk. In the economic front, recovery in major tourism source markets, especially in
Europe and the USA, is still fragile and household and company budgets may face extra pressure from the gradual withdrawal of
stimulus measures and from potential increases in taxation as results of growing public deficits. Oil prices are expected to remain
volatile through 2010 and security threats as well as the potential of increased related hassle and costs for travellers are still a
challenge. Finally, although the overall impact of the influenza A(H1N1) virus was milder until now than anticipated, experience from
previous pandemics shows that the situation could once again become challenging. 2010 will be characterised by a still quite rough
business environment for the tourism sector as revenues and yields are expected to recover at a slower pace than travel volumes.
Figure 4: Actual tourist arrival, core trend and 2010 forecast
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
To
uri
st a
rriv
al
YearActual tourist arrival Core trend
CGI Forecast 2010: 915,000 tourists
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Employment in the sector outlook
As per the AHRIM, the number of job losses in hotels is rather insignificant for the period June 2008 to June 2009, in line with the
job retention and preservation policy of the government. The Additional Stimulus Package (2008) stipulated clearly that “there will be
no layoffs without prior consultations with the Government and a plan for retraining”. In addition, the AHRIM and the
Empowerment Foundation have been working together on training programmes for hotel employees to avoid layoffs among
employers below managerial ranks. Moreover, hotel operators are confident about the future of the industry, and anticipate a strong
recovery in the sector after the outlook in our main source markets improve. Laying off workers in the current context is
considered as a wrong strategy, the reason being that there will be a shortage of experienced workers when the tourist arrivals pick
up. However, contracts of expatriate workers have not been renewed in several cases.
In case of prolonged stress…
As per the CEO of AHRIM, in case of prolonged stressed (another poor peak season in 2010 due to curtailed tourist arrivals), there
is risk of default (even though very unlikely) for some hotels as was the case after the Gulf War in 1993 whereby 6 hotels closed
down. The most sensitive segment prone to risk of failure is new hotels that are yet to position themselves well in the main source
markets to draw the advantages of a regular clientele which in general account for 30% of annual guests in some hotels. In this
context, the increased debt level of the sector for the past few years is a cause for concern. In terms of employment, the impact is
likely to be mitigated depending on hotel operators. However, non-managerial and manual workers with less experience in the
industry are more prone to lose their
jobs.
Way forward: post-financial
crisis…
All major stakeholders in the industry
worldwide are adamant and confident
that international tourism will flourish
further as the effects of the financial
crisis dissipate. However, the
timeframe is not yet properly defined
due to the high level of uncertainty in
the market. On the domestic front, the
AHRIM is also confident regarding
future prospects of the industry and
the Board of Investment forecasts 1.5
million tourist arrivals by 2013.
Using extrapolation, we have tried to
devise a scenario for the evolution of
tourist arrivals and occupancy between
2007 and 2015, which excludes the
600,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
1,600,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
To
uri
st
arr
ivals
New trend (based on 2007 & 2008) Future trend line Actual tourist arrivals
Actual
Forecast
Tourist arrivals with crisis
Catch-up
potential
17,486 15,841
12,390
737575
70
7374
61
(22,000)
0
Room
capacit
y
(100)
(50)
Occu
pan
cy r
ate
(%
)
Room capacity Occupancy rate
With crisis. Scenario excluding the financial crisis would yield an average
occupancy rate of 70%
Figure 5: Evolution of domestic tourist arrivals, room capacity & occupancy rates, 2000-2015
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impact of the financial crisis on tourist arrivals. It is based on the following assumptions:
(i) 2007 and 1H08 figures as new trend and first half arrivals account for 47% of total arrivals for the year
(ii) Government reforms that have been implemented will be successful in boosting tourist arrivals
(iii) Increase in number of hotels, room capacity, and bed places with major hotel projects in the pipeline. With current hotel
projects in the pipeline, room capacity is expected to increase by 5,929 rooms between 2009 and 2012, with a high concentration
being completed in 2011.
(iv) Greater visibility and penetration in main source markets following marketing campaigns carried out by the MTPA/hotel
operators and also successful diversification of markets
(v) The proportion of tourists residing in hotels remains constant
As such, we believe that tourist arrivals would have shifted upwards on a new trend line as from 2007 to 2011 following which
another drift in the trend line is expected in 2011/12 based on projected increase in room capacity with hotel projects in the
pipeline and renovation/extension of existing hotel. Based on the extrapolations, the number of tourists visiting Mauritius is
forecasted to hit around 1.4 million by 2013 and nearing 1.6 million by 2015. To meet this demand, the number of rooms is
estimated to stand around 18,000 with around 32,000 bed places. This suggests further scopes for investment in hotels in coming
years.
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Main drivers for the industry
> Economic factors like growth in main source markets, exchange rates, interest rate, oil prices and
so on
> Image & Visibility in main tourist-generating countries
> Adequate infrastructure and room capacity
> Air access liberalisation
> Consumer sentiment
> In several cases, contracts of expatriates not renewed
> In case of prolonged stress, less experienced non-managerial and manual workers prone to lose jobs
DRIVERS FOR TOURISM: DOMESTIC & WORLDWIDE
Economic factors in main source markets
Following last year‟s crisis, economic factors in main tourist-generating countries are crucial for determining international travel as
they impact directly on the „ability to travel‟ of individuals. As such, based on the IMF World Economic Outlook Update (October 2009),
most of our main tourist-generating countries were projected to face negative growths during 2009. However, a recovery is
expected in 2010 with world output expected to grow by 3.1% yoy. The following table shows the IMF projections for 2009 and
2010.
Table 1: Selected Growth Rates (%), Global economy
Country/Region 2007 2008 2009* 2010*
Advanced economies 2.7 0.8 -3.4 1.3
US 2.1 0.4 -2.7 1.5
Germany 2.5 1.2 -5.3 0.3
France 2.3 0.3 -2.4 0.9
UK 2.6 0.7 -4.4 0.9
Sub Saharan Africa 7.0 5.5 1.3 4.1
China 13.0 9.0 8.5 9.0
India 9.4 7.3 5.4 6.4
Middle East 6.2 5.4 2.0 4.2
World output 5.2 3.0 -1.1 3.1
Commodity Prices:
Oil 10.7 36.4 -36.6 24.3
Nonfuel (avg based on world commodity export weights) 14.1 7.5 -20.3 2.4
Source: IMF World Economic Outlook Update, October 2009 * Projections
Our main source market for tourism and second principal market for exports of goods, France, faced
tough times in 2009. As per the IMF, “the near-term outlook is challenging with real GDP projected
to drop by 2.4% in 2009, followed by a gradual recovery in 2010. The risks to the outlook are mostly
tilted to the downside in view of the sensitivity of the French economy to a worse-than-foreseen
contraction in the European Union and underlying tail risks, in particular in the financial sector. The
steep increase in unemployment could further shake confidence and weaken private consumption. A
worsening of the financial crisis would hurt banks‟ balance sheets and could further depress credit
growth. At the same time, lower trade openness and higher social protection are expected to
continue to shelter the French economy relative to its peers”. While some progress was
acknowledged in the implementation of structural reforms, more effort was deemed necessary to
boost potential output. The near and medium-term economic projections are subject to unusual
uncertainty at the present juncture. Other key markets namely UK, Germany, Italy and Spain face broadly similar outlooks.
Exchange rate dynamics affect directly the turnover of hotels through the average room rate which is often quoted in foreign
currency. Depreciation of the domestic currency tends to make the Mauritian destination cheaper and more appealing to foreigners.
Another important economic driver is interest rate, which impact on the profitability of local hotels. With many new hotel projects
and renovation/extension works in the pipeline, debt servicing (i.e. financing charges) is a non-negligible element for determination of
profits. Low interest rates can provide hotel operators with greater margin to implement marketing strategies (mainly advertising,
promotional campaigns, special pricing and so on) to lure tourists to the island. In addition, oil price fluctuation in international
markets is also a significant economic factor as it affects the price of air tickets.
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Image & Visibility in main source markets
Positioning the country‟s image of being a lucrative destination and enhancing the visibility of Mauritius in main markets has
contributed largely to boost tourist arrivals over the years. The main communication channels are aggressive marketing campaigns,
competitive promotional packages, road shows, strong tour operators and network of travel agents, branding and reputation of
hotels among others. In this respect, the budget of the Mauritius Tourism Promotion Authority (MTPA) has been reviewed upwards
in the Additional Stimulus Package and the Budget 2009/10 to help maintain the country‟s visibility in major source markets as well as
developing alternative markets like India to counter the downturn in domestic arrivals during 2009. Recently, the MTPA has branded
our destination with the slogan “L‟ile Maurice, C‟est un plaisir.”
Air access liberalisation
The share of air ticket in the whole package offered to clients coming to Mauritius is relatively high. However, with greater air
access liberalisation, this can be reduced and hence increasing our competitiveness in the international market (the higher number of
bilateral air services agreement with charted airlines, the more accessible and cheaper the Mauritian destination. Based on the latest
bilateral air services agreement dated 27 May 2009, the major developments regarding air traffic to Mauritius for 2009 are given
below:
Source market Main highlights
Australia
Air Mauritius: 1 combined weekly flight to Perth/Melbourne from 27 April to 24 October 2009
direct flights to Sydney during the peak season
Air Mauritius has entered into code share arrangements with Malaysian Airlines to market Perth, Melbourne and Sydney from Kua la Lumpur.
France
Air Mauritius:
7 weekly frequencies in April/Sept/October 2009
6 weekly flights in May/June 2009 2 additional weekly flights in July/August 2009
Air France:
4 weekly frequencies (March – October 2009)
Corsair:
2 weekly frequencies Will introduce a third weekly frequency from Nantes in November 2009
Germany
Air Mauritius:
1 weekly flight from Frankfurt/Geneva from 08 May to 24 October 2009
Condor:
2 weekly flights from Frankfurt
India
Air Mauritius: 3 weekly flights to Mumbai from April to June 2009
2 weekly flights in July, August, September and October 2009
1 weekly flight to Chennai/Bangalore from 29 March to 24 October 2009
1 weekly flight to New Delhi from 29 March to 24 October except from 27 May to 30 June
2 weekly flights to New Delhi from 27 May to 30 June 2009
Italy
Air Mauritius: 1 weekly flight to Milan in May, June, July, September and October 2009
2 weekly flights to Milan in August 2009
Volare:
3 weekly flights (has stopped its operations till October 2009)
Eurofly: 3 weekly flights to Rome(is presently operating 2 weekly flights and will introduce a fourth weekly flight in October 2009)
Air Italy:
1 weekly flight(has stopped its operations)
South Africa
Air Mauritius:
6 weekly flights to Johannesburg
2 weekly flights to Cape Town 1 weekly flight to Durban
South African Airways:
8 weekly flights to Johannesburg
Comair:
1 weekly flight (has reduced its weekly flights from 3 to 1 up to October 2009)
United Kingdom
Air Mauritius : 4 weekly flights from March to 15 April, 15 July to 16 September and October 2009
3 weekly flights from 16 April to 14 July and from 17 to 30 September 2009
British Airways :
3 weekly flights
Virgin Atlantic : 2 weekly flights (has stopped its operations and will resume in October 2009)
Source: Ministry of Tourism. Leisure & External Communications
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Main drivers for the industry
> As per the adaptive expectations theory, consumers
base their future expectations on past events
> Comments on Figure 6:
Step 1 – Shock occurs – people are very prudent - travel significantly less – in their minds, probability of
event happening again is 1.
Step 2 – People get accustomed to the shock, adapt
to it and factor in daily routine – start to travel more – in their minds, probability of event happening again
decreases
Step 3 – Individuals completely disregard the event as
a threat – travel as before or even more – in their minds, probability of event happening is 0.
Step 4 – Shock happens again – expectations are rife
> The Black Swan Theory (in Nassim Nicholas Taleb's version) refers to high-impact, hard-to-predict, and
rare events beyond the realm of normal expectations. Unlike the philosophical "black swan problem", the
"Black Swan Theory" refers only to events of large magnitude and consequence and their dominant role in history. "Black Swan" events are considered
extreme outliers.
> The financial crisis has been classified by some as a
Black Swan.
The agreements provide sufficient coverage of main tourist-generating countries for current demand, but will be widened further in
coming years to be in line with government‟s vision of 2 million tourists by 2015 and diversification of markets.
Adequate infrastructure and room capacity to meet demand
Over the years with development of the tourism industry, the number of hotel rooms has increased from 2,000 in 1980 to 11,488 in
2008. Going forward, the number of rooms needs to be significantly increased to meet tourist arrivals of 2 million tourists. As such,
with current hotel projects in the pipeline, the number of additional rooms for the period 2009-2012 amounts to 5,929. Moreover,
the completion of several IRS and RES projects in coming years and the fact that several existing hotels have indulged in renovation
and extension of their current infrastructure, will contribute further to boost room capacity for Mauritius.
Consumer sentiment
The tourism sector worldwide, although resilient over the years, is characterised by volatility, albeit often on short time span.
Applying the adaptive expectations theory to the international tourism industry is meaningful in the sense that travellers base their
future expectations on what has happened in the past until a major shock happens (e.g. September 11 terrorist attacks) following
which they become prudent again (i.e. travel less). However, as the fear of the event dissipates (or after people get “accustomed” to
the situation, adapt to it
and factor it in their
daily routine),
individuals start
travelling again, thus
explaining to some
extent the fluctuations
in world tourism (after
accounting for the
seasonality effect). The
importance of this
exercise allows us to
understand the gist of consumer rationality linking it to continuously evolving sentiment. Therefore,
the main conclusion from the above is that the extent of impact for any factor on international
tourism is dependent upon how quickly consumer sentiment changes. However, the analysis mainly
applies mainly to situations where the „willingness to travel‟ of individua ls is dented. Other factors
usually termed as „Black Swan‟ events (unforeseen high-impact drivers) might have longer and more
pronounced impacts on international travel. Nevertheless, all Black Swans will not have same impact.
Examples of such events are September 11 terrorist attacks and the current economic/financial crisis.
In the latter case, not only the „willingness to travel‟ has been affected, but also the „ability to travel‟ of
individuals has been eroded. Thus, it has imprinted marked impacts on international tourism in terms
of volume and recovery timeframe. Indeed, the financial crisis has engendered major adverse changes in the standard of living in main
tourist-generating countries as a result of reductions in the disposable income of consumers, job losses, dwindling turnover and
profitability of certain businesses, slowdown in economic activities and so on.
0
1
0 1 2 3 4 5 6 7 8 9 10
Perceiv
ed p
ro
babilit
y e
vent h
appenin
g
Time
Figure 6: Adaptive expectations and shocks applied to international tourism
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Consumer confidence
> The shorter the timeframe, the lower the degree of
the impact on tourist arrivals worldwide
> A crucial factor that cannot be measured impacting on international travel is consumer sentiment.
International tourism is very volatile due to several factors which affect consumer confidence. However,
the fluctuations are usually short-lived
> “Black Swan” events like the financial and economic crisis can affect not only the „willingness to travel‟, but
also the „ability to travel‟ of individuals. This implies that the impact on international tourism is usually for
a longer period of time
As such, we have tried to identify key factors for international tourism that can affect it either
positively or adversely. These dynamics can be classified using the timeframe of their impact on
arrivals worldwide namely: immediate, short term (less than 3 months), medium term (3 to 9 months)
and long term (more than 9 months – usually Black Swans). Often, as per the UNWTO, the impacts
on international tourism are largely localized and short-lived (as explained by the adaptive
expectations theory). The shorter the timeframe, the lower the impact on international tourism.
Immediate impact Short term impact (< 3months)
Strikes of airline-related workforce
Political upheavals
Curfew
Adverse climatic conditions (e.g. storm)
Terrorist attacks and other security scares – depending
on their magnitude
Natural calamities (having moderate impact on the
infrastructure of a country)
International events (e.g. Olympic Games, World Cup)
Airplane crashes
Hike/drop in price of air tickets (driven by fluctuations
in oil prices)
Promotional campaigns carried out by main tourist
destinations
Medium term impact (3 months to 9 months) Long term impact (above 9 months)
Seasonal travel
Political tensions
War
Health scares (e.g. outbreak of diseases like H1N1
influenza, chickungunya) – depending on their magnitude
Natural calamities (having pronounced impact on the
infrastructure of a country e.g. tsunami)
Economic factors (e.g. disposable income of consumers
worldwide)
“Black Swan” events – high impact, hard-to-predict and
rare events beyond the realm normal expectations (e.g.
September 11 terrorist attacks and last year‟s unforeseen
global financial and economic crisis impact on
international tourism)
A long recession which affects economic drivers
The above list of factors is not exhaustive, but based on recurrent and key drivers/risk factors
17
SUMMARY OF KEY CREDIT STRENGTHS AND WEAKNESSES FOR DOMESTIC TOURISM
Credit Strengths Credit Weaknesses
Robust and resilient – downside effects are usually short-lived
Recovering ability of the sector is strong – post-financial crisis outlook is very
favourable
Further air access liberalisation helping to provide more competitive prices for
air tickets – bilateral air services agreement (May 2009) provide for additional
flights and airlines
Public infrastructure projects in the pipeline like better road networks will help
to contribute to future development of the tourism industry
Investment in new hotels – room capacity to increase by 5,929 between 2009
and 2012 – also renovation and extension of several existing hotels in the
pipeline
Further diversification of markets underway – exploring and exploiting further
the potential of emerging source countries like India (in the pipeline) and China
(medium-term)
Government vision to reach 2 million tourists by 2015 – the framework and
infrastructure to meet such demand to be gradually set up
Potential to develop further the MICE and business sections (mainly with
expansion of the BPO sector and affiliations with China and India)
Measures taken by stakeholders of the industry at both micro and macro levels
to counter downturn
Domestic hotels tend to reinvest in infrastructure and other assets to
continuously improve quality and standard of service
Government‟s position not to downgrade the quality of tourists – upmarket
target maintained
Also, diversifying the package on offer to customers i.e. moving away from
traditional concept of “sun, sea and beaches” towards new forms of tourism
namely ecotourism, cultural, medical and so on
The country can derive benefits from its strategic geographical location with the
Football World Cup to be held in South Africa next year
Mauritian hotels have an excellent reputation in main source markets –
constantly innovating to uplift service quality
Presence of captive market – around 30% of tourists in certain hotels are
repeaters
Hospitality, diversity and bilingualism of the locals – alluring for tourists
Level of security (including sanitary issues) and stability within Mauritius makes it
an enticing destination for tourists
Tourists perception (upmarket) of the Mauritius as a “value for money”
destination compared to other destinations like Maldives. Hotels planning to
increase leisure activities and tours currently on offer.
International tourism - a highly volatile industry
The tourism industry has been more affected than other sectors by the financial
and economic crisis
Low arrivals and occupancy rates have resulted in plummeting turnover and
profitability for many hotels
Distance from source market – (i) the element of transport in the package is
relatively high and can be a deterrent; (ii) travelling hours to Mauritius from
major tourist generating countries relatively long
Road networks and public transport do not have proper guidelines to be tourist-
friendly
The business and MICE segment (the ones that have still been travelling after the
crisis) may be jeopardised by the change in habits of business travellers. A
recently published report by the Economist Intelligence Unit, commissions by
Amadeus, points to a new age of austerity for business travellers, which says that
executives will make fewer, shorter and cheaper business trips in 2009 and
switch from luxury extras in favour of basic efficiency and good service.
Diversification of markets might be limited by physiological factors. The average
tourist in emerging markets like India and China might not be looking for the
type of tourism our country offers i.e. “sun, sea and beaches” concept
Efforts to diversify markets over the past year have met with mitigated success
Aggressive competition from other countries like Maldives, Seychelles,
Guadeloupe, Martinique and so on for our main source market namely France
Security issues in recent years might have affected the island‟s image as a
“perfectly secure” destination
18
KEY INDUSTRY STATISTICS
2009: A year of turbulence…
After a record high in 2007,
growth in tourist arrivals
slowed down at 2.6% yoy in
2008 to reach 930,456
tourists. In 2009, the number
of tourists visiting the island
declined for the 1st time since
1982 by 6.4% yoy to 871,356
guests. The drop is in line with
the global international
tourism slump of 4% yoy
registered for the year. The
first half of the year posted a
resounding 9.7% regression in
arrivals, being the aftermath impact of the economic turmoil which started in mid-2008. The main underlying driver which impacted
on tourist arrivals for the 1st semester was an extremely volatile and unfavourable global economy characterized by (i) credit crunch,
Main Markets 2008 2009 % chg yoy
European market 608,358 579,509 -4.7
Of which:
France 260,054 275,599 +6.0
Germany 61,484 51,279 -16.6
UK 107,919 101,996 -5.5
Italy 66,432 56,736 -14.6
African market 213,868 204,308 -4.5
Of which:
Reunion 96,174 104,946 +9.1
South Africa 84,448 74,176 -12.2
Asia 72,771 62,131 -14.6
Of which:
India 43,911 39,252 -10.6
America 13,719 13,070 -4.7
Oceania 20,161 11,143 -44.7
Others 1,579 1,195 -24.3
Overall tourist arrivals 930,456 871,356 -6.4%
Table 2: Tourist arrivals by main markets, Year 2008 and 2009
700,000
750,000
800,000
850,000
900,000
950,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
Dec
-05
Jun-0
6
Dec
-06
Jun-0
7
Dec
-07
Jun-0
8
Dec
-08
Jun-0
9
Dec
-09
Mo
vin
g y
earl
y a
vera
ge
Mo
nth
ly t
ouri
st a
rriv
al
Month
Monthly tourist arrival Moving yearly average
Declining
arrivals
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec2008
2009
Figure 7: Comparative monthly tourist arrivals, 2008 & 2009
Figure 8: Monthly tourist arrival and moving yearly average, Dec 2006-Dec 2009
Recovery
started
19
(ii) widening financial crisis, (iii) soaring commodity and oil prices (iv) decreasing trade volume and (v) sharp exchange rate
fluctuations. The 2nd half of 2009 was rather mitigated by the slight recovery (+2.4% yoy) noted in the final quarter.
The imprint of volatility and crisis on main source markets …
Arrivals from Europe shrunk by 4.7% yoy to reach 579,508 guests,
driven by the poor performance of our main markets.
Nevertheless, it is important to point out that our main source
market, namely France, showed buoyant results in the context of
the global economic crisis with arrivals increasing by 6.0% yoy.
The UK market also proved to be more resilient than Italy and
Germany despite posting a drop of 5.5%. The Italian and German
source markets plummeted by 16.6% yoy and 14.6% yoy
respectively.
For the period under review, arrivals from the African region fell
by 4.5%, despite a substantial 9.1% yoy pickup in arrivals from
Reunion Island, which confirms the view of individuals travelling
shorter distances in times of crisis. In addition, tourist arrivals from the Asian market plunged by 14.6% yoy to attain 62,131. Arrivals
from India, our major source market from this continent, went down by 10.6% yoy from 43,911 in 2008 to reach 39,252 in 2009.
Arrivals from Oceania dived by 44.7 yoy to 11,143, mainly on account of the 45.0% yoy decrease from Australia. Furthermore,
arrivals the America region declined by only 4.7% yoy to reach 13,070, as the drop in tourist arrivals from the USA was countered
by the increase of 10.8% yoy from Canada.
Purpose of visit: MICE segment slackens…
94% of total tourists visiting Mauritius between January and September 2009 were for holiday purposes. Of note, the MICE segment
plummeted by a resounding 49.2% yoy after a rise in 2008, while the business division declined by 24.8% yoy during the first 9
months of 2009.
Table 3: Tourist arrivals by main purpose of visit, 2006-2008 & Jan-Sep 2009
Purpose of visit 2006 2007 2008 Jan - Sep 2008 Jan - Sep 2009 % Change yoy
Holiday 712,620 818,714 821,325 591,086 570,557 -3.5
Business 27,097 30,186 32,366 24,805 18,653 -24.8
Transit 29,590 35,375 42,657 32,790 5,206 -84.1
Conference 5,414 4,447 5,155 3,872 1,967 -49.2
Sports 2,515 834 1,080 909 1,265 39.2
Other & Not Stated 11,040 17,415 27,873 20,702 11,237 -45.7
Total 788,276 906,971 930,456 674,164 608,885 -9.7
Source: Central Statistics Office
France32%
UK12%
Reunion12%
South Africa9%
Italy7%
Germany6%
India5%
Others17%
Figure 9: Share of main source markets, 2009
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Average room rate of 2 major hotel
group
Year Average room rate (Rs)
NMH SRL
2003 4,041 6,141
2004 4,597 6,242
2005 5,202 6,513
2006 7,153 7,004
2007 9,469 6,331*
2008 9,674 6,882
Source: Annual reports of above companies
* As from 2007, SRL parted from St Géran Hotel
Overview of main tourism industry statistics
At the end of September 2009, the number of hotels in operation stood at 100. However, 8 hotels
were not operational due to renovation. Total room capacity for these registered hotels amounted
to 11,102 with 22,530 bedplaces. Moreover, total tourist nights spent in the country stood at 5.9
million for the first 9 months of 2009. In addition, room occupancy rate for all hotels averaged 58%
(with overall bed occupancy of 52%) for the period compared to 68% (with overall bed occupancy of
61%) for same period in 2008. For large hotels, the average room occupancy rate for January to
September 2009 (58%) was significantly lower than that achieved in same period last year (68%).
In line with the trivial growth achieved in arrivals, tourism receipts for the year 2008 went up by only 1.3% yoy to Rs41.2bn
compared to Rs40.7bn in 2007. Of note, 1H08 tourism earnings stood at Rs22.1bn (up by 12.2% yoy). However, the last semester
was marred by the impact of economic and financial hardships on tourist arrivals. With a slowdown in travel, passenger
transportation services plummeted from Rs11.2bn in 2007 to Rs10.5bn in 2008. As such, tourism earnings for the last 6 months of
2008 dropped by 9.0% to Rs19.0bn from Rs20.9bn for same period in the previous year.
According to revised figures of the Survey of Employment and Earnings, direct employment in hotels, restaurants and travel and
tourism establishments employing 10 persons or more amounted to 26,922 at the end of March 2009 compared to 28,534 at the
end of March 2008, representing a 6.4% yoy fall.
Macroeconomic perspective: after highs, lows set
in…
After boasting an exceptional high of 14.0% yoy in 2007, the
„Hotels and restaurants‟ segment expanded by only 2.7% yoy in
2008 pinned down by slack tourist arrivals during the year. In
2009, the segment dwindled by 8.8% yoy following the global
economic downturn. Of note, the sector as a % of GDP
Details 2006 2007 2008 As at September 2009
No of hotels 98 971 1022 1003
Room capacity 10,666 10,857 11,488 11,102
Bedplaces 21,403 21,788 23,095 22,530
Tourist nights („000) 7,761 8,987 9,100 5,850
Tourism receipts (Rsm) 31,942 40,687 41,213 25,685
Room Occupancy rate (All hotels) 66 76 68 58
Room Occupancy rate (Large hotels4) 69 78 70 59
Employment in the tourism industry 25,798 26,322 28,534
Restaurants 1,805 1,792 2,029
Hotel 19,536 20,223 22,317
Travel and tourism 4,457 4,296 4,188
Source: Central Statistics Office
1 excluding 5 hotels not operational because of renovation works
2 excluding 3hotels not operational because of renovation works.
3 Excluding 8 hotels not operational because of renovation works
4 well-established hotels with more than 80 rooms amounted to 43 in 2007and 47 in 1Q09
Table 4: Main tourism industry indicators, 2006-2008
Figure 10: Real Growth rate (%) – GDP and Hotel & Restaurants, 2000-2009F
Hotels and restaurants
GDP at basic prices
-10.0
-5.0
0.0
5.0
10.0
15.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009F
Gro
wth r
ate %
Year
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Hotel & Restaurant (H&R) at basic prices and Investment in the sector,
2006-2009(forecast)
Year
H&R at
current basic
prices
(Rs m)
Gross domestic fixed capital
formation
(Rs m)
Aircraft H&R
2006 15,500 5,675 6,558
2007 19,517 2,515 10,127
2008 20,048 0 11,919
2009F 17,960 0 12,978
Source: Central Statistics Office
declined from 9.4% in 2007 to 8.6% in 2008. As per the CSO, the figure for 2009 is expected to stand
around 7.3%.
As such, the contribution of the tourism industry to GDP growth of 5.3% achieved in 2008 stood at
0.2%. Same is expected to be negative (-0.8%) in 2009. Gross domestic fixed capital formation
(GDFCF) for the sector impressively grew by 8.4% yoy in 2008 despite the high base effect following
the amazing 39.2% yoy expansion achieved in the prior year. Despite the global activity downturn and
poor performance of the domestic tourism industry, investment in „Hotel and restaurant‟ is projected
to hike by 6.2% for 2009. The share of investment in „Hotel and restaurant‟ segment as a % of total
GDFCF hiked from 17% in 2007 to 18% in 2008, and stagnated at same level in 2009. Finally, it is
worth noting that investment in aircraft was nil for the past 2 years.
Tour operators
Tour operators combine tour and travel components to create holiday packages (including flight, transfer from airport to hotel,
hotel room, service of a local representative and so on) which they sell to travel agents. As per AHRIM, tour operators account for
65%-70% of total tourist arrivals and 90% tourists residing in hotels. According to the Survey of Outgoing Tourists 2006, a tourist
spends Rs39,578 on average during his stay – in line with earnings per tourist for 2008 which amounts around Rs44,000. Using
extrapolation, tour operators represented around Rs28.6bn of tourism receipts in 2008. As such, major groups of hotels operate
their own tour operators in main source markets, but are still dependent on foreign tour operators like Thomas Cook, TUI,
Nouvelles Frontieres, Thomson and so on.
22
APPENDIX
A1. MEASURES TO BRACE AGAINST THE ECONOMIC & FINANCIAL CRISIS
International
In the Tourism and Economic Stimulus – Initial Assessment
(July 2009) paper, the UNTWO describes the efforts
deployed to harness the sector with the necessary
tools to brace against these challenging times.
UNWTO response is focused on 3 interrelated pillars
namely:
(i) Resilience > to support the sector‟s immediate
response, UNWTO established a Tourism Resilience
Committee (TRC) to provide a framework for better
market analysis, collaboration on best practices and
policymaking. The TRC aims to be a focal point for
crisis response for the tourism sector around the
world.
(ii) Stimulus > UNWTO advocates tourism‟s priority inclusion in general economic stimulus measures and urges governments to put
tourism at the core of their stimulus packages.
(iii) Green Economy >tourism must be at the forefront of the transformation to the Green Economy contributing with carbon-clean
operations, jobs in environment management and energy-efficient building.
As stressed by UNWTO on the occasion of the G20 Summit, tourism means “Jobs, Infrastructure, Trade and Development”. Many
countries have acted swiftly in developing stimulus measures to sustain demand, support tourism enterprises and maintain/increase
employment. As such, national stimulus packages for tourism recovery are focused on promotion and marketing as well as
economic measures. These include fiscal and monetary instruments like increasing public expenditure and reducing taxes (fiscal), and
the use of monetary tools such as cash ratio, interest rates, new credit lines and mutual warranty systems, especially for SMEs. For
analysis purpose, the UNWTO has classified the measures into 8 broad categories as follows:
1. Fiscal measures
2. Monetary measures
3. Human resources measures
4. Marketing measures
5. Travel facilitation
23
6. Public/private partnerships
7. Environmental measures
8. Transnational cooperation
(Of note, Mauritius has implemented all the above measures)
So far, most countries have implemented measures in the areas of marketing and public/private partnership which have a direct and
immediate mandate. In addition, a significant number of countries have also applied fiscal and/or monetary measures to maintain
access to credit and liquidity for tourism businesses in order to keep their operations and maintain jobs. Finally, travel facilitation
measures such as applying visa on arrival, decreasing the cost of visas or, in some cases even, exempting visa requirements for a
certain number of source markets are major steps towards the resilience of the sector, and the economic recovery at large.
Domestic
Macro level measures
Additional Stimulus package (December 2008) Budget 2009/10
Environment Protection Fee payable only if hotels show a profit at end of their
financial year (1 January 2009 and until 31 December 2010) – payment at end of
the financial year instead of every month
Temporary Solidarity Levy will be suspended from 1 January 2009 to 31
December 2010.
Tour operators will be allowed to sell their duty free vehicles within the first
four years of purchase and pay duty on a pro rata basis rather than reimburse
the full amount of duty.
Additional Rs100m for promotion budget of the Mauritius Tourism Promotion
Authority.
Government is organising special promotion campaigns at the thirty five points
now served by Air Mauritius under code sharing agreements with Air France
and in China for the code share agreement with Malaysian Airlines.
MTPA to appoint Public Relations/marketing representatives in some new
markets.
Airlines exempted from the contribution to the MID Fund from 1 January 2009
to 31 December 2010.
AHRIM and the Empowerment Foundation will work together on a training
programme to avoid layoffs in particular, among the 70% of employees of hotels
that are below managerial ranks. There will be no layoffs without prior
consultations with the Government and a plan for retraining.
Setting up of Hotel Reconstruction Scheme till December 2010. Refund of the
lower of 50% of wage bill or difference between the new and old rental.
An alternative financing approach – allowing individual foreign and Mauritian
investors to acquire hotel rooms and villas but they have to be made available to
hotel operators.
Suspension of rental payments for small hotels on less than one hectare and less
than 50 bedrooms till December 2010.
Rescheduling of rental arrears for hotels (small hotels : 5 years as from January
2011; others : 3 years)
Developing a new policy on the rental amount for islets and other state land
with severe planning restrictions that limit construction and development.
The Saving Jobs Recovery (SJR) Fund will operate a scheme to assist small hotels
and restaurants to improve, refurbish and renovate. In addition, the SJR Fund
will also finance up to Rs5m for cost reduction projects through energy
management for small and medium hotels.
Providing additional Rs200m to the Mauritius Tourism Promotion Authority to
further expand its promotional campaign.
The Tourism Authority Act will be amended to regulate Whale and Dolphin
watching.
The Ministry of Tourism and the MBC will set up a Tourism Channel to provide
information on activities, events and facilities to encourage tourists to move
throughout the island and share the fruits of tourism with a wider cross section
of the population. The Tourism Fund will collaborate with the MBC to finance
the project.
Government is amending legislation to prevent non-citizens to acquire
residential properties outside the IRS and RES schemes without the required
authorization.
24
Micro level – Hotels
As per the AHRIM, the performance of hotels during these difficult times does not depend on the size of the hotels, but mainly on
the impact of the crisis on target markets arrivals. In regular years, most hotels tend to cover their costs during the period April-
September, and generate their profits in the period October-March. With the drop in tourist arrivals and an average occupancy rate
of 59% for the 1st 9 months of 2009 (compared to 70% for same period in the previous year), it is a possible outcome that some
hotels might not be able to cover their costs as has been the case for Naїade Resorts. However, costs will be covered at the
expense of profitability for the current financial year. The following table gives the financial performance of 4 important hotel groups
for the period (year for NMH and 9 months for the other 3 hotel groups) ending September 2009.
Table 5: Financial results for main hotel groups for quarter ending September 2008 & 2009
Rs’000 Period Period ending September 2008 Period ending September 2009 Growth yoy %
Turnover
NMH Year 8,099,921 7,401,852 -8.6%
Sun Resorts 9 months 2,416,885 2,484,240 2.8%
Naїade Resorts 9 months 1,735,603 1,756,369 1.2%
Belle Mare Holding Limited 9 months 14,336 12,286 -14.3%
Net profit
NMH Year 1,845,820 1,175,788 -36.3%
Sun Resorts 9 months 166,614 82,668 -50.4%
Naїade Resorts 9 months (16,785) (357,819) NA
Belle Mare Holding 9 months 13,151 34,535 162.6%
Turnover for main hotel groups stagnated or declined and net profit regressed substantially for period ending 2009, driven by the
9.7% yoy contraction in arrivals at national level for the period and low occupancy rates. Many local operators discounted
significantly their room rates in an attempt to boost occupancy levels.
As such, to face against further downturn for the final semester, hotels have implemented the following internal measures and
initiatives:
Aggressive marketing campaigns to enhance visibility in major source destinations
Promotional packages to both local and tourists
Cost cutting measures mainly through energy management
Preserving employment
Re-branding of their services with the aim of boosting their standard and quality
Adapting their services to the type of tourists (mainly by country of origin)
Soft renovations – refurbishing, decoration and so on
25
REFERENCE
IMF World Economic Outlook, July and October 2009
Public Sector Investment Programme – tourism and civil aviation
Interview of Mr Patrice Legris (CEO of AHRIM) August 2009 and other statistics from AHRIM
UNWTO Tourism Barometer – June & October 2009 and January 2010
UNWTO Tourism and Economic Stimulus – Initial Assessment – July 2009
Bilateral Air Services Agreement (BASA)/Memorandum of Understanding (MOU) – 27 May 2009
IATA Financial Forecast June 2009
IATA Economics Briefing Airline Business Confidence Index
IMF public information notice - France