PEF-GHATOF Performance of GHANA Tourism Sector 2008

8/6/2019 PEF-GHATOF Performance of GHANA Tourism Sector 2008

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M I D - Y E A R P R I V A T E S E C T O R R E V I E W O F T H EG H A N A I A N E C O N O M Y

P R E PA RE D BY J EA N LU KA Z M I H F OR T H E

G H A N A T O U RI S M F E D ER A T IO N ( G H A T OF )

Tourism Sector


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Contents

1. The expectations you had for the year2. Reasons for such expectations3. The performance of your sector during the first half-year in terms

of output, employment, profitability, turnover and level ofcompetitiveness.

4. What were the factors that affected the performance of yoursector?

5. Policy initiative in 2008 that has boosted or retarded the growthof your sector.

6. Expectations for the last half year.7. Challenges facing the sector.8. Actions taken to address challenges.9. Recommendations to Government for an improved performance

of the sector.

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Mid-Year Private Sector Review of the Ghanaianeconomy- TOURISM SECTOR-GHATOF


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The expectations for the year 2008

y GDP

y GROWTH

y EMPLOYMENT

y DEMAND

y VISITOR EXORTS

y CAPITAL INVESTMENT

y GOVERNMENT EXPENDITURE

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GDP:

y The Travel &Tourism Industry is expected tocontribute directly

4.3% to Gross Domestic Product (GDP) in 2008 (GHC6,847.4bn or US$726.2 mn),

rising in nominal terms to GHC18,416.3 bn or US$1,678.9 mn(4.5% of total) by 2018.

The T&T Economy contribution (% of total) should rise from9.6% (GHC15,186.8 bn or US$1,610.7 mn) to 9.9%(GHC40,761.9 bn or US$3,715.9 mn) in this same period.

5/13/2011Mid-Year Private Sector Review of the Ghanaianeconomy- TOURISM SECTOR-GHATOF

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REAL GROWTH:

y In 2008, Travel & Tourism in Ghana is Forecastto SeeReal Growth of:


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Rate Value

Direct Industry GDP 4.5 % ...to GHC6,847 bn(US$726 mn)

Direct IndustryEmployment

0.8 % ...to 175,000 jobs

Economy GDP 4.9% ...to GHC15,187 bn(US$1,611 mn)

Economy Employment 1.2% ...to 393,000 jobs


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DIRECT IMPACT 2008

y In 2008 Ghana's Travel & Tourism is Expected toGenerate GHC15,187 BN (US$1,611 MN) ofEconomic Activity (GDP). The industry's Direct

Impact includes:


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Rate Value

Direct Industry GDP 4.3 % of Total GDP GHC6,847 bn (US$726mn)

Direct Industry

Employment

3.5 % of Total Employment 175,000 jobs


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INDIRECT IMPACT 2008

y However, since Travel & Tourism Touches All Sectors of The Economy,its Real Impact is Even Greater. In 2008 Ghana's Travel & TourismEconomy Directly and Indirectly Accounts for:


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Rate Value

Economy GDP 9.6% of Total GDP GHC15,187 bn (US$1,611mn)

Economy Employment 7.8% of TotalEmployment

393,000 jobs

Exports, Services &

Merchandise

20.7% of Total Exports GHC 12,766 bn (US$1,354

mn)

Capital Investment 8.2% of Total Investment GHC 4,102 bn (US$435mn)

Government Expenditure 3.3% of Total GovernmentExpenditure

GHC 729 bn (US$77 mn)


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EMPLOYMENT:

y Travel &Tourism Economy employment is estimatedat

393,000 jobs in 2008, 7.8% of total employment, or 1 in every12.9 jobs.

By 2018, this should total 505,000 jobs, 8.0% of totalemployment or 1 in every 12.6 jobs.

The 175,000 T&T Direct Industry jobs account for 3.5% of totalemployment in 2007 and are forecast to total 226,000 jobs or3.6% of the total by 2018.


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DEMAND:

y In 2008, Travel & Tourism is expected to post GHC28,128.4 bn (US$2,983.3 mn) of economic activity (Total

Demand), growing to GHC73,607.2 bn (US$6,710.2 mn) by 2018.


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VISITOR EXPORTS:

y Exports make up a very important share of Travel &Tourism's contribution to GDP. Of Ghana's total

exports, Travel & Tourism is expected to generate 20.7% (GHC12,766.2 bn or US$1,354.0 mn) in 2008,

increasing to GHC33,349.1 bn or US$3,040.2 mn (21.7% oftotal), in 2018.


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CAPITAL INVESTMENT:

y Travel & Tourism Capital Investment is estimated at GHC4,101.5 bn, US$435.0 mn or 8.2% of total investment in

year 2008. By 2018, this should reach GHC10,797.1 bn, US$984.3 mn or

8.4% of total.


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GOVERNMENT EXPENDITURE:

y Government Travel & Tourism operatingexpenditures in Ghana in 2008 are expected to total

GHC729.3 bn (US$77.3 mn), or 3.3% of total governmentspending.

In 2018, this spending is forecast to total GHC1,961.6 bn(US$178.8 mn), or a 3.4% share.


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Reasons for such expectations

y ACN/CAN 2008 Increased arrivals from Africa an sub-

region Increased revenues

y UNCTAD XII/AU Summit/ Ghana@50 Construction of Extra Luxury

accommodation provision- direct &indirect jobs

y Tourism Marketing and Promotion ITB 2008 [resumption]- increased

arrivals from Germany COTTM 2008 [new market]-

Gold Award in April- increased arrivals from China

Joseph Project- downturn [recession inUS- main market]

y Civil War in Bawku Low turnout in North and Ghana as a

wholefor Community-Based Tourismoriented Tourists- Mole, Weichiau,Sirigu/SWOPA

Travel Advisory negative about Ghana

y Crime Mugging on the rise Armed Robbery Roadside Thuggery on the rise Travel Advisory negative about Ghana

y High Road Accident Rates Even President involved!!!

y

Elections 2008 Risk of clashes- reduced tourist arrivals in

Oct-Dec

y High Oil Prices Higher air fares to compound existing

high rates

y Recession in US [Credit Crunch] African American Market adversely

affectedy National Airline Crisis- GIA

Barbados; irregular flight schedules

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Performance of Tourism SectorJanuary-June 2008


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Output

y Focus on Key Areas of the Value Chain Hotel Occupancy- high

Tours Generated and Executed high

Food and Beverage Sales- high

y Taxes and Levies from Sector High Metropolitan Assemblies

VAT

GTB

District Assemblies

Airport Taxes IRS

y Pro-poor impact high due to high % of MSMEs

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Employment

y Hotels- Trend towards Temporary Staff Recruitment

Indicator of Seasonality and or lack of recognition for skills Indicator of very little quality-demanding consumers

Impact on Service Quality

y Tour Operators Trend towards Temporary Staff Recruitment [Tour Guides]

Indicator of Seasonality

y F&B Trend towards Temporary Staff Recruitment

Indicator of lack of recognition for skills Indicator of very little quality-demanding consumers

Indirect Jobs from Capital Projects Hotel Construction

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Profitability

y Hotel Occupancy Upper quartile 65% plus

80% plus [for 3-5 star in Accra]

y Tours Cultural Tours increasing Educational Tours increasing

y Food and Beverage Subsector Trends in Self-service increasing

Ghanaian increasingly dining out at lunch-time and on weekends-[Sundays especially]

More establishments coming p due to low barriers to entry,especially in informal Sector

Profitability of up to 70% gross

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Level ofCompetitiveness

y Internal

International/ Transnational players changing the climate inHotel Sub-Sector

Ethnic Cuisine taking over in the Fine Dining Category

Service Quality still a challenge in MSMEs

Hotels, Restaurants, Chop Bars

y External Tourist Product Competition questionable because of Unique

cultural product

Neighbours leveraging on Lack of Aggressive TourismBranding and Marketing by Government killing Sector

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Factors that affected the Performance of TourismSector I

y Lack of bankable projects

Financial institutions not supporting sector apart from CarRentals

Hotels built on loans [2-3yrs] defaulting- financial institutionsdo not offer long-term loans because they do not understand[long-term] profitability of Sector Projects

Tourism Sector still MSME driven- over 85%

Support to Tourism MSMEs

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POSITIVEPOSITIVE NEGATIVENEGATIVE

y ACN/CAN 2008 Increased arrivals from Africa an sub-

region

Increased revenuesy UNCTAD XII/AU Summit/

Ghana@50 Construction of Extra Luxury

accommodation provision- direct &indirect jobs

y Tourism Marketing and Promotion ITB 2008 [resumption]- increased

arrivals from Germany COTTM 2008 [new market]-

Gold Award in April- increased arrivals expected from China

y Crime Mugging on the rise Armed Robbery Roadside Thuggery on the rise Travel Advisory negative about Ghana

y High Road Accident Rates Even President involved!!!

y Elections 2008 Risk of clashes- reduced tourist arrivals in Oct-

Dec

y High Oil Prices Higher air fares to compound existing high rates

y

Recession in US [Credit Crunch] African American Market adversely affected

y National Airline Crisis- GIA Barbados; irregular flight schedules

y Civil War in Bawku Low turnout in North and Ghana as a wholefor

Community-Based Tourism oriented Tourists-Mole, Weichiau, Sirigu/SWOPA

Travel Advisory negative about Ghana

Factors that affected the Performance ofTourism Sector II

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Tourism Policy initiative in 2008

y that has boosted the growth of tourism sector

y that has retarded the growth of tourism sector

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Expectations for July-Dec 2008

y Average Peak Season in August because of expected fallin African American numbers Because ofCreditCrunch

y Low Season in Election Period Because of perceived risk of violence

y Low Season Because ofBawku War

y Rising Oil Prices can keep more dollar tourists out due

to high air fares; however, local inflation will make tourism cheaper for Euro/Pound

Sterling holders

y Domestic Tourism still unexplored potential

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Challenges facing the sector

y Excessive operational tariffs

y Weak domestic air link

y Expensive destination

y Low Government Budgetary Allocation

y Misplaced Priories of Industry Decision Makers

y Sector financing restricted to Development Funded

Projects that skew progress towards foreign policiesof donor governments

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Actions taken to address challenges

Excessive operational tariffs

y GTB and GHATOF working together on this Weak domestic air link

y Local investors must be encouraged- beyond City Link Expensive destination

y In line with policy to keep out Mass Tourism Low Government Budgetary Allocation

y Advocacy Strategy being developed to build a Case for MoreTourism Funding Misplaced Priories of Industry Decision Makers

y The 3 Key Figures-GHATOF+MOTDR+GTB must cooperate beyond

collaborative self-destruction Sector financing restricted to Development Funded Projects that skew progress

towards foreign policies of donor governments

y Financial Sector reluctant to research and learn about sector in spiteof attempts

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Recommendations to Government for animproved performance of the sector.

y Incentivise Private Sector investments in sector

y Practicalize GIPC exemptions that do not work!

y Dedicate a bigger and proportional % of NationalBudget to Tourism, being 4th largest FX earner

y Recognize the pro-poor impact of Tourism on theNation

y

Be reminded of the Competitiony Te need for afocusedaggressive National

Branding and Marketing Strategy beyond Tourism

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Documents

PEF-GHATOF Performance of GHANA Tourism Sector 2008