François Eynaud, the President of Mauritius’ premier hospitality association, the AHRIM (Association of Hôteliers and Restaurants in Mauritius), spoke to AfricaMoney on how Mauritius is being affected by weakening demand for hospitality services, both in terms of lower European arrivals and lesser tourist spend. Our tourism expert also noted that the island needs at least 10% growth in tourists over 5 years, against the current growth of only 2-3%, for reasonable occupancy rates of 73%.
- What are the objectives of AHRIM in 2014 to achieve its goal of promoting tourism through the creation of a better environment and atmosphere for all those working directly or indirectly in the tourism sector?
With 2014 expected to be another difficult year for the Mauritian tourism industry, the association aims at establishing – through consensus with the authorities, the airlines, and the other stakeholders – a clear way forward to urgently lift the destination to achieve better growth rates.
This entails a straightforward acknowledgement of the abnormally wide gap between an over-supply of accommodation in all forms and an obvious stagnation in tourist arrivals since 2010, and a firm commitment by all to work together, towards reducing the mismatch between the offer and the demand.
Weakening demand, both in terms of tourist arrivals from Europe and average tourist spend, affects the whole sector, including ground handling, transport, shopping, consumption of recreational leisure, and restaurants.
AHRIM will insist on three major action lines. First, boosting demand for air service and destination marketing where AHRIM is actively involved in the public/private Destination Joint Committee with the MTPA. Second, reinforcing product attractiveness on the twin pillars of clean and embellish, and finally, by providing timely and relevant support to operators through the transition.
AHRIM is also working closely with the Tourism Authority to simplify regulations and red tape and improve the ease of doing business.
- Can you share your views on the recent hike in trade fees and how it is expected to impact the hospitality industry?
I think it is important for me to clarify one aspect of this trade fees issue. We are not disputing any hike in those fees as they stand; we are above all concerned that out of the blue, the new law simply states that henceforth economic operators in the sector would be required to also pay to local authorities, be it Municipal or District Councils, more or less the same amount of fee that they were already paying to the Tourism Authority. This is why we had no other alternative than to file our case in court to raise this duplicity of fees issue.
We came to learn afterwards that we reached this situation because the authorities have not been able to clear their differing views on how they would like to charge operating fees or local taxes, and eventually on how they would wish to balance such income.
- Year-on-year, we have clearly seen an excess in accommodation capacity in Mauritius which is no longer sustainable. How do you think Mauritius can rebalance accommodation inventory with tourist arrivals potential?
Since the ‘Assises du Tourisme’ in 2006 when an objective of 2 million tourists by 2013 was announced, the private sector has built increased accommodation capacity and a new modern airport was born.
Since 2008, the financial crisis has hit the world – in particular our European traditional markets – and no revised plan for the tourism industry has been established. The number of hotel rooms has grown by 25% since 2007 to reach 13,500 and the registered non-hotel rooms by 75% (excluding the informal sector). In parallel, the tourist arrivals have grown by only 9% since 2007 and the number of air seats has remained stable.
National occupancy has therefore dropped from 76% in 2007 to 62% in 2013, even as operating costs have increased.
We need today 400,000 to 500,000 additional tourist arrivals to achieve a reasonable 73% national hotel occupancy. To close this gap, we need 10% growth during 5 years with no additional room capacity being built, which is an unrealistic scenario. AHRIM has therefore recommended a freeze on new hotel permits until we achieve better arrivals growth.
To boost the growth of tourist arrivals, the most important thing to do is to improve our air connectivity and competitiveness drastically. The recent independent study on air access to Mauritius clearly mentions that our competitors destination have better air access at much cheaper rates and taxes.
- With the ongoing turmoil in the tourism industry and the increasing uncertainties looming ahead, can you comment on the challenges faced in elaborating a new strategy and a quantified road map for the tourism industry?
Our tourism industry is definitely going through challenging times with tourist arrivals growing by just 2-3% and tourist receipts dropping while the international tourism market is growing at 4-5%.
There is a dire need for an updated coordinated and shared 5-year strategic plan for this industry, which is a pillar of the island’s economy.
The challenge to execute this new plan is to get all stakeholders working together in a new mindset. The world is changing fast and the past recipe for our success does not guarantee us a great future. We must adapt to the changing environment and elaborate new strategies and solutions. The improvement of our air connectivity and competitiveness is probably the biggest issue we have to solve. This has to be addressed in parallel to Air Mauritius restructuring and strategic alliances.
- Finally, please let us know your views on the Mauritius tourism industry?
Although our tourism industry performance is currently sub-par, there are a few good initiatives which are encouraging. The development of the Chinese market for instance is showing promising results, even if I believe our strategy on this market must be adjusted so that we attract primarily the high-end Chinese tourists. Our brand new airport is a major asset to boost our hospitality capabilities.
We have witnessed over the last few years an increase of tourists in the mid-market segment. This has happened without any conscious planning, and coupled with the price war between operators, it is certainly confusing the image of the island from that of a premier, high-end destination.
Quality is what has made Mauritius’ reputation and this image must be preserved at all costs. The protection of our environment is part of what makes Mauritius a high-end destination.
The industry is also facing the challenge of finding skilled employees. Our objective is to intensify education, training and ensure tourism is attractive to the younger generation.
Like the sugar and the textile industries some year ago, our tourism industry needs an innovative reform to ensure its successful future growth.
More business news on AfricaMoney