Kenya tourism on the rebound

Paz Casal, analyst travel and tourism at Euromonitor International, gives the lowdown on tourism in Kenya…

After a relatively volatile general election in 2013, prospects for the Kenyan tourism industry are increasingly positive. Tourist arrivals are expected to rise by 4% in 2013, driven by political stability and strong economic growth in the country. According to the IMF, Kenya is predicted real GDP growth of 5.6% in 2013, which should boost investor confidence and attract foreign direct investment (FDI).

Healthy economic growth is attracting new source markets to Kenya, such as the BRICs, while rising disposable incomes and urbanisation are driving domestic and regional travel. By 2017, the number of tourists travelling to Kenya is set to reach 1.6 million. However, significant investment in infrastructure and tourism training will be required for inbound visitor numbers to show significant growth. In addition, uncertainty with regard to marketing budgets and taxation measures could negatively affect tourism growth in the country.

Kenya’s rise to middle-income status

Thanks to strong economic growth, the middle-class in Kenya is growing, along with annual disposable income. By 2017, it is predicted that more than 85% of households in Kenya will be earning in excess of U$S1,000 annually, with over 40% earning more than U$S2,500. The government aims to become a middle-income, newly-industrialised country by 2030 as part of its Vision 2030 plan, while the discovery of oil could prompt national oil production. As disposable incomes rise, travel will become more accessible, with both leisure and business visits to domestic and regional destinations growing in number.

New source markets boost tourism

The UK is the dominant source market for international visitors to Kenya, counting 189,000 trips in 2012, followed by the US, Italy and Germany. Nonetheless, regional arrivals and visitors from the BRIC countries are registering much higher levels of growth. In 2012, China and Brazil were the fastest growing international source markets in terms of arrivals, with increases of 8.8% and 6.3%, respectively, on the previous year.

Travel from Middle Eastern countries is also rising, with the United Arab Emirates registering an increase of 6.2% in 2012. In addition, Eastern Europe is tipped to be a new source of arrivals, with the number of tourists from Russia expected to increase by 4.6% annually to 2017, arriving via the growing number of flight connections in the Middle East.

Kenya ranks second in MICE tourism in Africa
Business tourism in Kenya is expected to grow by 34.4% over 2012-2017. The category is booming as a result of economic growth, the rise of low-cost carriers and increasing flight connections to the country. Kenya was recently ranked as the second most popular MICE tourism destination in Africa in the wake of an increase in local and international conference tourism of 12% and 6%, respectively. The Kenya International Conference Centre witnessed a 45% increase in conferences in 2012 alone thanks to intensive advertising from the Kenyan Tourist Board and its associates.

Kenya set for tourism growth

Despite an 18% drop in international arrivals in the first half of 2013 due to uncertainty surrounding the March elections and the EuroZone crisis, Euromonitor International predicts positive growth in the second quarter as the country enters the high season. Tourism demand is expected to continue to grow over the long term. Nonetheless, recent government proposals to reduce the marketing budget of the Kenyan Tourist Board and the possible addition of VAT to tourism products could jeopardise the industry’s growth at a time when a strong global marketing campaign is most needed in order to compensate for the decline in arrivals earlier in the year.

For further insight, please contact Paz Casal, analyst travel and tourism at Euromonitor International, at [email protected]