Hospitality Industry in Tanzania_HAT Presentation to Hon. Minister Prof Rev1

�

ENGAGEMENT MEETING WITH

HON. MINISTER PROF. JUMANNE MAGHEMBE,

MINISTRY OF NATURAL RESOURCES & TOURISM

• About the Hotels Association of Tanzania

• Tourism Trends

• The Good News

• The Bad News

• From Issues to Solutions

• Final Steps

Who?� 119 Members ��232 accommodation facilities

(Hotels, Lodges and Tented Camps)

� Non-profit incorporated 2004

� 1 of 12 members of the Tourism Confederation

of Tanzania (TCT)

Mission�Encourage, promote and protect the interests of

accommodation providers in Tanzania

Some of the many locations

where HAT Members offer

accommodations

TOTAL

119 Members ��232

facilities��5,951

rooms��11,177 beds

Serengeti Serengeti Serengeti Serengeti & & & & GrumetiGrumetiGrumetiGrumeti

45 facilities45 facilities45 facilities45 facilities��856 rooms856 rooms856 rooms856 rooms��1654 1654 1654 1654 bedsbedsbedsbeds

NgorongoroNgorongoroNgorongoroNgorongoro

23 facilities23 facilities23 facilities23 facilities��722 rooms722 rooms722 rooms722 rooms��1288 beds1288 beds1288 beds1288 beds

Arusha, Kilimanjaro & MoshiArusha, Kilimanjaro & MoshiArusha, Kilimanjaro & MoshiArusha, Kilimanjaro & Moshi

23 facilities23 facilities23 facilities23 facilities��581 rooms581 rooms581 rooms581 rooms��1033 1033 1033 1033

bedsbedsbedsbedsTangireTangireTangireTangire NPNPNPNP

9999 facilitiesfacilitiesfacilitiesfacilities��184 184 184 184

roomsroomsroomsrooms��377 beds377 beds377 beds377 beds

Mafia IslandMafia IslandMafia IslandMafia Island



RuahaRuahaRuahaRuaha

7 facilities7 facilities7 facilities7 facilities��101 101 101 101


Dar Dar Dar Dar eseseses SalaamSalaamSalaamSalaam



SelousSelousSelousSelous



KaratuKaratuKaratuKaratu////ManyaraManyaraManyaraManyara



TangaTangaTangaTanga, , , , PanganiPanganiPanganiPangani, , , , SaadaniSaadaniSaadaniSaadani, , , ,

UsambaraUsambaraUsambaraUsambara, Amani & , Amani & , Amani & , Amani &

BagamoyoBagamoyoBagamoyoBagamoyo



KataviKataviKataviKatavi & & & & MahaleMahaleMahaleMahale



MikumiMikumiMikumiMikumi NP, NP, NP, NP, MorogoroMorogoroMorogoroMorogoro, , , ,

MufindiMufindiMufindiMufindi & & & & UdzungawaUdzungawaUdzungawaUdzungawa



GombeGombeGombeGombe, , , , KigomaKigomaKigomaKigoma & & & &

RubondoRubondoRubondoRubondo



WMAs

21 facilities��352

rooms��709 beds

How?� Provide legal, professional and technical advice

� Lobbying and advocate for policy, legal and regulatory

reforms that positively impact the industry, overall

economy and society

Goal�Make the Tanzania hospitality industry globally

competitive and viable for investors, employers,

employees, local communities, suppliers and

Government

TanzaniaMore than doubling of international arrivals from 501k to 1.2 mn and US$799 mn to US$2 bn

674 mn to 1.2 bn international arrivals worldwide spending from US$495mn to US$1.25 trillion

Sub-Saharan Africa more than doubling to 34.4 mn, but still representing only 3% of global tourism -- the lowest volume of any region. Only 2.1% of global tourism spending!

From Booking to Tours From Booking to Tours From Booking to Tours From Booking to Tours

& Services In& Services In& Services In& Services In----CountryCountryCountryCountry

Booking

•Agency

•Online

•Tour operator

Transportation

•Air

•Car rental

•Taxi

•Ferry

Accommodation

•Hotels

•Apartments

•Shops in hotels

Food & Beverages

•Restaurants

•Bars

•Food kiosks

•Food souvenirs

Handicrafts

•Shops

•Craftsmen

•Workshops

Tourism Assets

•Natural – Wildlife, Parks, Mountains, Lakes

•Cultural –Archaeological sites, museums, art, music.

Leisure & Tours

•Tour guides

•Tours

•Wellness

Support Services

• Info Centers

•Grocery

•Laundry

•Banking

From Purchase From Purchase From Purchase From Purchase

Overseas to Money Overseas to Money Overseas to Money Overseas to Money

Entering TanzaniaEntering TanzaniaEntering TanzaniaEntering Tanzania

At long last, I have 8 days 8 days 8 days 8 days

and $8000 $8000 $8000 $8000 to visit the

Serengeti and Ngorongoro!

My travel agent is booking

with a great operator

Joe paid for his dream

trip. I subtracted my

24% commission 24% commission 24% commission 24% commission and

booked with the “On

Safari” Agency.

Mike called me to

book Joe’s Trip. He

paid $6080paid $6080paid $6080paid $6080. I

deducted my 14% 14% 14% 14%

commissioncommissioncommissioncommission and I

transferred $5228 transferred $5228 transferred $5228 transferred $5228 to

the Serengeti Lodge.

$5228 to $5228 to $5228 to $5228 to

TanzaniaTanzaniaTanzaniaTanzania

What happens when What happens when What happens when What happens when

the money enters the money enters the money enters the money enters


Ok, “On Safari” sent me

$5228 for Joe’s stay of

8 nights8 nights8 nights8 nights. My staff and I are

glad to have the business,

but first things first – a few

taxes and fees to pay.

Ay yi yi…let’s see

what we have to pay.

I’m all for paying our

fair share, but this is

painful. Let’s do the

math.

Serengeti Lodge Serengeti Lodge

Ok, I start with $5228 start with $5228 start with $5228 start with $5228

and then pay VAT, TDL pay VAT, TDL pay VAT, TDL pay VAT, TDL

and Park Fees and Park Fees and Park Fees and Park Fees , which

leaves me with $4800 $4800 $4800 $4800

$4800 $4800 $4800 $4800

remainingremainingremainingremaining




I don’t want to bore you

with a long list and we

do not want to whine,

but we need to mention

a few numbers.

So here is what happens:

$4800 less $4368 $4800 less $4368 $4800 less $4368 $4800 less $4368 for

Cost of Sales, Salaries,

Marketing and Overhead

= $416= $416= $416= $416

Then I pay the

Corporation Tax of 38%Corporation Tax of 38%Corporation Tax of 38%Corporation Tax of 38%

and I am left with $256left with $256left with $256left with $256.




So…the Lodge is good for So…the Lodge is good for So…the Lodge is good for So…the Lodge is good for

Government: Over $1500 Government: Over $1500 Government: Over $1500 Government: Over $1500

in payments from a single in payments from a single in payments from a single in payments from a single

visitor’s stay.visitor’s stay.visitor’s stay.visitor’s stay.

It is also good for the It is also good for the It is also good for the It is also good for the

staff and their families. staff and their families. staff and their families. staff and their families.

And good for our guests. And good for our guests. And good for our guests. And good for our guests.

But a business is supposed to be But a business is supposed to be But a business is supposed to be But a business is supposed to be

profitable and the math is not adding profitable and the math is not adding profitable and the math is not adding profitable and the math is not adding

up well for me. up well for me. up well for me. up well for me.

Either Either Either Either I increase prices, which is going I increase prices, which is going I increase prices, which is going I increase prices, which is going

to make me less competitive, or I close to make me less competitive, or I close to make me less competitive, or I close to make me less competitive, or I close

and find a more profitable business. and find a more profitable business. and find a more profitable business. and find a more profitable business.

Or Or Or Or I work with HAT and the Government I work with HAT and the Government I work with HAT and the Government I work with HAT and the Government

to find “Winto find “Winto find “Winto find “Win----Win” Solutions!Win” Solutions!Win” Solutions!Win” Solutions!

2014: Total Jobs (direct, indirect & induced):

1,337,000 jobs (12.2% of total)

2025: Total Jobs: 1,695,000 (11.5%)

Jobs in hotels, travel agencies, airlines and other

passenger transportation services, restaurants, leisure

and with suppliers and services such as construction,

printing, and finance.

In 2015…

� Tourism was reported to have earnedUS$2.2 billion / TZS 4.8 trillion.

In 2014…

� Tourism contributed TZS8.2 trillion(14%) to GDP and will rise to TZS15.8trillion by 2025 (13.2%).

� Tourism earned more in foreignexchange than Gold.

� Visitor Exports totalled TZS3.4 trillion(22%) and will rise to TZS5.7 trillion by2025 (21%).

PolicyPolicyPolicyPolicy

Product & Product & Product & Product & MarketingMarketingMarketingMarketing

Human Human Human Human ResourcesResourcesResourcesResources

InfrastructureInfrastructureInfrastructureInfrastructure

InvestmentInvestmentInvestmentInvestment

•National College system in place

•Certified Apprenticeship Proramme in Hotel Operations in place (2014)

•Expanding Airports

•Coastal Road

•Tax holiday for new investors

•World Class Wildlife Diversity

•Rich cultural heritage

•Growing visitors and receipts

•Government currently considering reforms on taxes.

� Coastal tourism is undeveloped.

� The Southern Circuit offers rich opportunities for

expanded wildlife opportunities.

National Parks are congested - WMAs

are tourism next level of growth.

Wildlife Management Areas (WMAs)are rarely visited.

21 WMAs are certified by theCommunity Wildlife ManagementAreas Consortium for communities toprovide tourism services. ONLY 4 areworking and benefiting the intendedcommunities.

� Mafia Island - Tanzania is home to the 3rd largest Marine Park in the World.

Kudos for Tanzanian Tourism!Kudos for Tanzanian Tourism!Kudos for Tanzanian Tourism!Kudos for Tanzanian Tourism!

1 of top 5 African countries with the highest tourism potential

Voted among top 10 Safari Destinations

Voted BEST beaches in AFRICA

Rank 7th worldwide for tourism related natural resources

The Bad News! Weaknesses & ThreatsThe Bad News! Weaknesses & ThreatsThe Bad News! Weaknesses & ThreatsThe Bad News! Weaknesses & Threats

PolicyPolicyPolicyPolicy

Product & Product & Product & Product & MarketingMarketingMarketingMarketing

Human Human Human Human ResourcesResourcesResourcesResources

InfrastructureInfrastructureInfrastructureInfrastructure

InvestmentInvestmentInvestmentInvestment

•Unclear policies and regulations

•Multiplicity of taxes, levies and fees

•Lack of Policy Coordination

•National College not filling skills gap

•Tourism Development Levy funds not fully tapped

•Labor laws restrict non-residents and cross-border flow.

•Limited Tourism Infrastructure limits access to South

•Impacted by Tax Policy and Regulatory Requirements.

•Land not readily available to investors

•Inadequate marketing and branding

•Wanton destruction of natural assets

SUSTAINABILITY & COMPETITIVENESS

Preservation of Natural

Assets

Business Climate

Human Resources

POLICY REFORMS

� Top Issues

� Poaching of Elephants, Lions and Rhinos

� Dynamite Fishing and Poisoning

� Encroachment

� Desertification

No Wildlife! No Tourism!

Potentially more than 1 million jobs lost!

2009 – 2014

Tanzania lost(60% loss in 5 years)

(Source: MNRT)

44,000 Elephants

Elephant population in

Selous-Mikumi 1976 -

2013

(Source:Source:Source:Source: TAWIRI (2013)

No Wildlife = No TouristsNo Wildlife = No TouristsNo Wildlife = No TouristsNo Wildlife = No Tourists

No Tourists = +1 Million Jobs lostNo Tourists = +1 Million Jobs lostNo Tourists = +1 Million Jobs lostNo Tourists = +1 Million Jobs lost

Tanzania’s elephants, lions and rhinos are being decimated through poaching.

Our rich coastal tourism potential is being destroyed before we can

develop and protect it for our country and world heritage.

The ONLY AFRICAN

COUNTRY where

dynamite fishing

occurs.

30% of protected

areas are encroached

Land encroachment and DesertificationLand encroachment and DesertificationLand encroachment and DesertificationLand encroachment and Desertification

From 2005 to 2010 deforestation led to a loss of 4030 km2 of forest per year

Tanzania ranked 17th in the world for

average annual area of deforestation

and 3rd in Africa

� Top Issues

� National College lacking resources to fill the skills gap. TDL is supposed to help, but the College receives less than what is needed.

� More faculty capacity building needed

� More private sector cooperation

� Non-citizen labor restricted

� Young industry needs labour development

� Increased capacity needed in MNRT

� Increased local and community capacity needed

Insufficiently trained and educated people

in tourism = Unsustainable, lower quality

tourism!

Overall, low rankings for Tanzania’s business climate in general and specifically for tourism!

117th/167– Better

than Kenya (139th)

and Uganda (139th)

120th/140 – Better

than Zimbabwe

(126th) , but worse

than Kenya (99th),

Uganda (115th) and

Rwanda (58th).

93rd/141 – Better

than Zimbabwe

(115th) Rwanda

(98th) and Uganda

(114th), but worse

than Kenya (78th).

139th/189 – Better

than Zimbabwe

(155th) , but worse

than Kenya (108th),

Uganda (122nd) and

Rwanda (62nd).

All three issues are inter-connected!

Unclear policies, institutions & regulations.

Lack of Policy Coordination.

Multiplicity of taxes, levies and

fees.

� 53 different taxes, levies

and charges that are

applicable to businesses

within the Tourism sector

� Hospitality Industry

pays 35+ different taxes,

licences, levies, fees

and charges;

� Air operators pay 40

taxes and fees

� The average effective

tax rate for tourism

businesses is 48%;

� Nuisance taxes – study

shows 24 taxes

represent only 4% of

total tax revenue.

Taxes collected by TRA

•Corporate Tax (30%)

•Skills and Development Levy (5%)

•Staff Pensions (10% from employer)

•Land Rent

•Property Tax and Land Rent

•City Service Levy

•EWURA tax (2% of billed)

•REA Tax (3% of billed)

•Airport tax

•VAT

•Tourism Development Levy

Regulatory License, Fees & Permits

•Tourism Agency License (TTLB)

•Business License Category A or B

•Work Permits

•Fire Certificate

•Motor Vehicle Road License

•Vehicle Fire Safety sticker

•Vehicle Inspection

•Vehicle Safety Week Sticker

•Firearms License

•Occupational Health and Safety Authority (OSHA)

•Performance/ Entertainment License

•Frequency Radio License

•Base station license

Other Fees, Levies and Charges

•Certificate of Incorporation

•Business Registration name

•Stamp duty on rent

•Liquor license

•Music/TV license

•Concession Fees (TANAPA, NCCA, and Marine Park Service)

•Ngorongoro Crater Fees

•Hunting Block Fees

•Conference Hall Registration

•SUMATRA Vehicle Sticker

•Motor Vehicle Guide Fees

•Walking Guide Fees

•NCAA Vehicle Fee

Some of the fees on the MNRT Website

Policy Policy Policy Policy Reforms Reforms Reforms Reforms that…that…that…that…

Enable our Businesses to Enable our Businesses to Enable our Businesses to Enable our Businesses to sustainably growsustainably growsustainably growsustainably grow

Build the capacity Build the capacity Build the capacity Build the capacity of our institutionsof our institutionsof our institutionsof our institutions

Build the capacity Build the capacity Build the capacity Build the capacity of Tanzanians of Tanzanians of Tanzanians of Tanzanians

Government Government Government Government

+ Private + Private + Private + Private

Sector Sector Sector Sector

CooperationCooperationCooperationCooperation

From Issues to SolutionsFrom Issues to SolutionsFrom Issues to SolutionsFrom Issues to Solutions

� Centre of Excellence – develop National College of

Tourism (Bustani Campus) into a Centre of Excellence

� Work Permits - Improve processing for key professions

unavailable locally

� Labor Law – Review law and regulations to be

balanced, and not over protective of employees

� TDL – Increase allocation for the College.

� PPP to grow the national apprenticeship program.

� Declare Poaching, dynamite fishing and poisoning as national

security threats in addition to bringing back the national anti-

poaching operation

� Combat crimes such as encroachment of wildlife areas,

deforestation and desertification; enforce deterring measures

� Strengthen and enforce stiff laws – providing for life sentences

for the more serious environmental crimes

� PPPs to manage WMAs, forests, coastal areas and islands, and

tourism hunting.

Support Government Revenue Collection, but…

� Rationalize and Streamline ALL Tourism-related

Taxes, Licenses and Fees.

� Centralize Tax Collection into a One-Stop Shop

� Merge tourism institutions into a single, well-

integrated and coordinated organization.

Specific Measures:

�Reduce and harmonize LGA taxes

�Allow a minimum period of 12 months notice

and consultations before introducing increases

in fees, levies and other charges.

� Establish a Business Tax Working Group via

Ministry of Finance

� Convene Ongoing PPP Forums to Review and

Rationalize Taxes, Fees, and Regulations

� Consider us your partners in optimizing the

effectiveness and services of Government.

Communication and Coordination are

essential to ensuring a sustainable and

competitive tourism and hospitality

sector and implementing the proposed

solutions.

Tourism is Everybody’s Business! So the fewer barriers to

business, the more benefits for Tanzania, Tanzanians and

Businesses!

Hospitality Industry in Tanzania_HAT Presentation to Hon. Minister Prof Rev1

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Transcript of Hospitality Industry in Tanzania_HAT Presentation to Hon. Minister Prof Rev1