Tourism: the figures of discord

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There is no consensus on expected tourist arrivals and receipts. The health situation in the issuing countries and in Mauritius itself complicates the situation.

Tourists did not rush to the gate when the borders partially reopened on July 15. With around 1,500 bookings through the end of September at the 14 hotels put into operation, this is far from a marketing success even though hospitality specialists had already anticipated it. It will undoubtedly be necessary to wait for the real start on next October 1 when the vaccinated tourists will be spared the quarantine. Although questions arise. Particularly on the objectives in terms of both arrivals and tourism receipts, while Mauritius’s main competitors in this region, the Seychelles and the Maldives, are already one step ahead.

Admittedly, since the budget estimate to target 650,000 tourists within the next twelve months, specialists have not finished discussing the issue, insisting on the optimistic nature of this objective. This, even as Mauritius’s main source markets in Europe are still suffering the economic effects of a prolonged lockdown linked to the Covid pandemic and already face the risks of a new wave that could require further restrictions.

Statistics Mauritius’ mess on two growth forecasts, published on June 28 and June 30, respectively, in two versions of the national accounts based on two different tourist arrivals figures, the first of which (June 28) was withdrawn in 24 hours, moreover testifies to the lightness with which the financial analysts of the Ministry of Finance constructed their assumptions. In the first case, Statistics Mauritius had forecast a growth rate of 4.4% in 2021 based on tourist arrivals of around 150,000 to 160,000 for the current calendar year. A document disappeared from the organization’s website and replaced 48 hours later by a second with statistics considered to be rather close to those issued in the last National Budget. This represents growth of 5.4% in 2021 and a presence of 325,000 tourists for the same period.

In the entourage of the Ministry of Finance, the first version of the national accounts, prepared internally by Statistics Mauritius, should not be published and would be more of a worst-case scenario for the economy. Still, these growth projections, even revised upwards, suffer from contestation and are far from the 9% growth forecast for fiscal year 2021-22 and driven mainly by a tourism industry which would regain color.

Bhavik Desai, a financial analyst in the Axys Group’s research unit, shares the optimism of the Ministry of Finance, especially its projection to welcome 650,000 tourists within the next 12 months. In his report published on July 15, he argues that Mauritius can potentially accommodate up to 623,000 tourists in the next 12 months from the first phase of reopening. At the same time, in the 15 months following the reopening, the country will garner tourist revenues of Rs 28 billion and Rs 41 billion respectively. Either a daily injection of Rs 64 million and Rs 93 million in the economic circuit.

Total opening of air access

To arrive at these figures, Axys Research was based on an economic hypothesis favoring the historical seasonality between the main tourist source markets coupled with the current vaccination rate in the country to calculate tourist arrivals while ensuring that connectivity air would not be interrupted. “It will take between 3 and 4 flights per day during the first phase of reopening to gradually increase and reach between 6 and 8 flights per day. This is less than the average of 15 flights per day as was the case with the Covid-19 crisis, “said Bhavik Desai.

An analysis that is far from being favored by professionals in the sector. Kevin Teeroovengadum, who sits on the boards of a range of hotels, argues that the finance ministry’s goal could be met under one condition, namely adoption by civil aviation authorities a policy of total opening up of air access. Two islands in the Indian Ocean, namely the Seychelles and the Maldives, have adopted it and are currently experiencing a strong recovery in their tourism sector. “The Maldives recorded 100,000 arrivals per month at the start of the reopening of their borders. Today, they number 600,000 tourists and will reach almost 1.3 million by the end of the year. The Seychelles opened their borders last March with 50% fewer tourist arrivals, but in the end they earned the same revenue as in 2019 by counting on spending tourists, “says Kevin Teeroovengadum. The commercial success of these two destinations comes down, he says, to a single factor: the presence of a myriad of airlines, even low-cost ones like Fly dubai, to serve them. Result of the races, we meet them all: Emirates, Quater Airways and Etihad, among others.

Can Mauritius take this challenge and open its destination to new operators besides Air Mauritius and traditional companies? A question, you will say, which would be the responsibility of the authorities even if such a step cannot be done in a hurry.

However, other issues must be taken into the equation. In fact, all the international agencies combined, from the IMF to Moody’s to the World Bank, are categorical: it will be necessary to wait until 2024 for this industry to return to its pre-crisis level of 2019. Reason given: the situation health in the countries emitting tourists abroad coupled with the restrictions imposed on travel will continue to impact their tourism industry. The situation escalates further when South Africa, which remains a major tourist reservoir, faces a social crisis with an outbreak of violence that threatens to dampen the enthusiasm of its tourists to travel.

In a recent report, Moody’s recalls how Mauritius’ tourism activity will lag behind the national economy for a long time to come. In question, the changes in the behavior of travelers who favor short destinations to the detriment of long-term ones. Suddenly, the economic impact of the Covid-19 has reduced like a skin of heart the purchasing power of potential visitors due to the high unemployment rate and lower income levels in tourism markets par excellence for Mauritius. This while the debt levels facing international airlines could cause them to stop serving the Mauritian destination.

All in all, the summer is likely to be cooler this year with a recovery in the tourism sector highly uncertain and dependent on the deployment of the current vaccination campaign. In the process, other factors can affect the ability of this industry to generate tourism growth and revenue. In particular if the European clientele, contributing 58% of the total number of arrivals in 2019, decides to favor domestic tourism, faced with a new epidemic wave in Mauritius with the threshold of 1,000 active cases already exceeded, resulting in a third lockdown.

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