Tourism players fear Finance Act will disrupt sector

The tourism industry is still reeling from the effects Covid-19 pandemic and would greatly suffer the effects of the Finance Act 2023.

Players in the sector interviewed in Mombasa County said that with additional taxes, there is every possibility the cost of holidays and leisure will rise.

The players said there would generally be a slow uptake of leisure services, further affecting revenues generated from the sector among those with the lowest-hanging fruits in the economy.

Kenya Association of Hotelkeepers and Caterers(KAHC) Coast branch executive officer Sam Ikwaye said tourism would be affected because people will focus on necessities of life.

"As we eye full tourism recovery, it is prudent that tourism promotion and marketing needs more funding. Market promotion and presence are necessary for the sustainability of any brand. The Magical Kenya brand will struggle if there is no support from the Kenya Tourism Board (KTB) to help it roll out its programmes," Dr Ikwaye said.

In the recent budget estimates for 2023-2024, the tourism ministry has an allocation of SH6 billion.

Ikwaye said that there have been good strategies in the past, which have been laid out and shared with respective governments, but all have suffered due to fewer cash injections to fund such ventures.

Ikwaye pointed out that training and manpower development for tourism will possibly not get anything because of the competing needs.

"With the failure to check and audit standards for the longest time, the sector will suffer if the allocated amounts aren't sufficient for agencies to fulfil their mandates," he said.

"The Tourism Finance Corporation (TFC), which was instrumental in financing investments in the sector, should be returned.

He said funding from TFC supported investors to improve their businesses.

"With low allocations, investors cannot access affordable financing for their investments," Ikwaye said.

He added: "Other agencies like the Tourism Research Institute need lots of funding but have limited allocation."

Ikwaye said that the Charter Incentive Programme, which aimed at encouraging more charter flight rotations, ensured a steady flow of international tourists into destination Kenya.

Malindi-based tourism consultant Titus Kangangi said the Finance Act will have a serious impact on tourism but for a short period.

"The country is known to be resilient, and things will go back to normal," he said.

Kangangi said that the Act in its entirety would hurt the bottom line approach.

"High fuel and electricity prices will make our production costs high, and once passed to consumers, it will make our destination more expensive and uncompetitive."