Tourist inflows up ahead of peak season

The tourism sector is set to be one of the biggest economic drivers for 2023, with private sector green hydrogen projects, new aquatic projects such as salmon farming and kelp production at Lüderitz, as well as investments in gas pipelines and mining explorations boosting the tourism industry.

This is according to a Quarterly Economic Review of the first quarter of 2023 by Simonis Storm Securities.

Simonis says the occupancy rate in April 2023 across nationwide hospitality establishments stood at 51,8%, compared to 36,5% recorded in the same month last year.

“This is the highest monthly occupancy rate recorded for 2023 thus far. On a monthly basis, national occupancy rates were 11,2 percentage points higher, increasing from 40,7%,” said the analysts.

The year-to-date (YTD) average in 2023 (40,3%) is merely 3,7% short of reaching pre-pandemic levels of 2019 when the YTD average was 44,0%.

Worth noting is that Fly Namibia recently increased its weekly flights to Oranjemund from three to five to cater to a growing number of Shell and Debmarine staff.

According to Simonis, indications are that hotels at Lüderitz and guest houses at Oranjemund are running at higher occupancy rates as a result of oil operations in the area.

At least 22 610 rooms were sold nationally in April 2023, along with 44 482 beds. This is 65% lower compared to 65 449 rooms sold in April 2019.

The gap between the change in rooms and occupancy rates can be explained by fewer tourism facilities available, as some of them were forced to shut down due to the pandemic lockdown.

The central area of Namibia recorded the lowest occupancy rate in April 2023, at 37,3%, from the highest the previous month of 52,7%.

This month, the coastal area had the highest occupancy rate of 58,1% (18,4 percentage points higher than the prior month), followed by the northern area at 56,0% (21,5 percentage points higher than the prior month) and the southern area at 49,3% (8,2 percentage points higher than March 2023).

According to statistics, leisure tourism continues to be the main driver of tourist inflows, accounting for 98,3% of visitors in April 2023, while business travellers accounted for 1,7% and conference attendees accounted for 0,02%.

As usual, the majority of visitors during April 2023 came from Germany, Austria and Switzerland at 41,0%. Locals came second highest in occupancy rates of 18,6%, South Africans (8,3%) and the French (6,8%).

According to the Hospitality Association of Namibia (HAN), the growth in the portion of visitors from Namibia’s main tourist source markets (Germany, Austria and Switzerland) is partly due to the availability of 10 direct flights each week between Windhoek and Frankfurt.

The inflows from Europe picked up in January of this year and has been on an upward trend since then.

Locals are occupying fewer of the rooms due to straining economic conditions. Indeed, accommodation services became 15,7% more expensive in April 2023 compared to April 2019, while accommodation services inflation stood at 6,7% year-on-year (y/y) and food inflation at 13,5%, which are above headline inflation of 6,1% y/y in April 2023.

This implies that locals are limited in spending on accommodation as disposable incomes are strained by higher food prices, among other living costs.

According to NSA data, since April 2019, hotel, café and restaurant prices have increased by 16,9%, driven by both catering rising 18,0% and accommodation services up by 15,7%.
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