Kenya's Tourism Industry Bounces Back

Kenya’s tourism is bouncing back after years of the slowdown in the country’s incoming tourist arrivals.

• The United States remained Kenya’s leading market, growing by nine percent with 245,437 arrivals.
• Kenya’s tourism earnings grew by 3.9 percent to $1.6 billion.
• Total of 2,048,834 foreign visitors visited Kenya in 2019 compared to 2,025,206 international arrivals in 2018.

Domestic Tourism

As you must have noticed, most tourism advertisements are targeted at foreigners, yet several African countries are experiencing a strong increase in domestic tourism – specially countries like Rwanda, Kenya, Mozambique, Tanzania, Ivory Coast and Rwanda.

With over 1.1 billion Africans  expected to be middle class by 2050. African governments are getting serious about promoting domestic tourism. Reducing local flight taxes and promoting new new tourist destinations among local and regional tourists can yield rich dividends for Africa’s tourism earnings.

In the East Africa region, Uganda and Tanzania continue to be major source markets for Kenya’s tourism sector. According to recent figures, Kenya received 245,437 tourists from America in 2019, the highest from one country, while Uganda and Tanzania were second and third with 223,010 and 193,740 respectively.

Arrivals into Kenya from neighbouring Uganda are expected to increase further this year following the introduction of Uganda Airline’s direct flight from Entebbe to Jomo Kenyatta International Airport (JKIA) in Nairobi and Moi International Airport (MIA) in Mombasa. Mombasa doubles as a business and holiday destination for Uganda and the new air link will boost both business and tourism between Uganda and Kenya.

On the other hand, Qatar Airways also started direct flights from Doha to Mombasa in December 2018. Ethiopian Airlines also increased the number of flights to Mombasa from one to two daily in 2019 boosting arrivals through MIA.

In 2018, Travel & Tourism grew 5.6% to contribute KSHS 790 billion and 1.1 million jobs to the Kenyan economy. This rate of growth is faster than the global average of 3.9% and the Sub-Saharan Africa average of 3.3%. This makes Kenya the third largest tourism economy in Sub-Saharan Africa after South Africa and Nigeria both of which grew substantially less than Kenya the last couple of years.

Surprisingly, Africa’s tourism industry is now the second fastest growing in the world.

In Ethiopia, for example, relaxing visa restrictions while improving flight connectivity has seen Addis transformed into a regional transport  hub, even overtaking Dubai as the world’s gateway to Africa. This has resulted in Ethiopia becoming Africa’s fastest growing travel country, growing by 48.6% in 2018, according to recent reports.

A report compiled by Jumia states that:

• Africa’s travel and tourism remains one of the key growth drivers of the continent’s economy, contributing 8.5% (or $194.2bn) of the GDP in 2018; from 8.1% and 7.8% in 2017 and 2016 respectively.
• This growth record placed Africa as the second-fastest growing tourism region in the world, with a growth rate of 5.6% in 2018 after Asia Pacific and against a 3.9% global average growth rate.
• In 2018, the African continent received 67 million international tourist arrivals (+7% increase), as compared to 63 million in 2017 and 58 million in 2016. Africa received only 5% share of international arrivals in 2017.
• Morocco and South Africa were the top tourism destinations, with approximately 11 and 10 million arrivals per annum respectively.
• Ethiopia’s visa relaxation policies combined with improved connectivity as a regional transport hub placed the country as Africa’s fastest growing travel country, growing by 48.6% in 2018 to be worth $7.4bn.
• The travel and tourism sector directly and indirectly provided employment for about 24.3 million people in 2018, accounting for approximately (6.7%) of total employment.
• Leisure remains an important component of Africa’s tourism industry, taking up a majority 71% of the tourist expenditure in 2018.
• Moreover, more governments among them Kenya Rwanda, and South Africa are seen to be driving initiatives towards diversifying business tourism products through MICE (meetings, incentives, conferences and exhibitions). However, business expenditure remained at a staggering 29% in 2018 from 30% in 2017.
• In 2019, there was less hotel pipeline activity with 75,155 rooms in 401 hotels; as compared to 2018 which had a pipeline activity of 76,322 rooms in 418 hotels. Sub Saharan Africa recorded the highest pipeline with 45,861 rooms in 276 hotels, while North Africa had 29,294 rooms in 125 hotels.
• The decline in the total Hotel Chain Development Pipelines in Africa has been largely attributed to chains deleting deals that were unlikely to happen and “cleaning” their pipeline from the previous year.
•  In terms of room revenue, it is expected that in the next five years, Nigeria will be the fastest-growing market with a projected 12% compound annual increase. It will be followed by Tanzania and Kenya, with a projection of 8.2% and 7.4% compound annual increases respectively.
• While Africa’s passenger traffic increased from 88.5 million in 2017 to 92 million in 2018 (+5.5%), it’s world share was only 2.1% (down from 2.2% in 2017). This was attributed to high competition from other regions such as the Asia Pacific. Africa’s share is however predicted to grow by 4.9% annually over the next 20 years.

Investment Opportunities

Due to its stable business environment and steady economic growth, Kenya’s hospitality industry is definitely set for greater heights. Major goals have been achieved: the improvement of infrastructure, as well as the simplification of permit acquisition for foreigners keen on investing in the hospitality sector.