The tourism industry will have a rough ride in the months ahead due to the financial crisis that continues to hit the world, analysts have predicted.
It could be argued that the sector most hit by the global financial crisis is the entertainment and hospitality industry.
This is because entertainment, leisure and tourism are very vulnerable to economic uncertainty and volatility. Most travel and tourism activities involve optional expenses.
During times of economic recession, people like to conserve money to cover the essentials of life such as food, shelter and family necessities.
In almost all periods of economic crisis or global tourism scare arising from events such as the September 11 attack on the United States, people did not stop travelling but they had travelled differently from the way they were used to.
In Europe and USA presently, there has been a loss of confidence in the whole banking system, which has reduced lending to businesses and individuals, and this reduction in credit is affecting businesses and consumers alike.
Coupled with the reduction in house prices, there has been a marked reduction in business activities and consumer spending, and this affects the hotel industry, as business travel slows, and discretionary spending on leisure travel goes down.
In Africa, particularly countries like Ghana, Kenya, Tanzania, South Africa and Gambia, where large amounts of income comes from international tourism, experts say there will be a reduction in international visitors in the coming months as spending slows down.
In Ghana and other countries, experts say the amount of workers’ remittances from the Diaspora is likely to reduce, as workers are laid off in developed countries, and they no longer have the funds to send home.
Regardless of the gloomy pictures some commentators paint for the hospitality industry, the fact remains that most people worldwide will continue to get away from home and make religious pilgrimages.
But analysts noted that tourism and hospitality businesses which will survive in the months ahead are those with ability to adapt to the new circumstances.
“Those who think and act strategically and have the ability to adapt their business models quickly to the new realities will overcome this challenge,” Sales and Marketing Manager of Protea Hotel, Anku Victor, said in a telephone interview with CITY&BUSINESS GUIDE.
Mr. Anku said between the short and medium term, there will emerge travellers who will spend less on travel, stressing that, “those tourism and hospitality businesses, which can adapt to service travellers on a tighter budget, will do well.”
The Marketing Manager of Protea Hotel further told this paper that “there is very little effect of the global financial crisis on the hotel business in Ghana.”
For instance, we are making huge money in international conferences, Mr Anku said.
Experts also predict that destinations with favourable exchange rates may benefit from the current credit squeeze. Ironically, the surge in value of the US dollar and the Euro may stimulate Americans, Europeans and Japanese to resume travelling overseas.
The growth of Chinese and Indian outbound travel may slow but will continue because these economies are still growing. There is likely to be a growth in domestic travel or short haul international travel as people choose to stay closer to home.
Global growth is still expected to be positive next year at 2.2 percent with China and India still achieving high growth of six to seven percent.
The IMF forecasts growth in Africa to be 5.1 percent next year.