The coastal area of Namibia recorded the lowest occupancy rate in May 2023, at 44.2%, from the highest last month of 58.1%, hospitality statistics for May by Simonis Storm show.
In the month, the central area had the highest occupancy rate of 54.9% (17.6 percentage points higher than the previous month), followed by the northern area at 52.1% (3.9 percentage points lower than the previous month) and the southern area at 48.5% (0.8 percentage points lower than April 2023).
Occupancy rates slowed by a meagre 1 percentage point m/m in May 2023, from 51.8% in April to 50.8% in May 2023. However, on an annual basis occupancy rates have improved by 11.4 percentage points from 39.4% in May 2022, still indicative of a recovery in the sector.
The report also notes that May 2023 experienced business visitors taking up a larger stake of all occupancy rates (accounting for 9.52% of visitors), increasing by 7.8 percentage points compared to the prior month. Visitors for leisure (89.6%) remained the driver of tourism in our country, while 0.9% of visitors attended conferences in Namibia.
“Going forward, we do expect business and conference travel to increase owing to foreign investors being part of local green hydrogen pilot projects and Hyphen’s project in the South, as well as ongoing exploration for gas, oil, copper, gold and rare Earth metals,” says Simonis Storm economist, Angelique Bock.
Europeans accounted for 55% of all visitors across nationwide hospitality establishments. As usual, majority of visitors during May 2023 came from Germany, Austria, and Switzerland (30.9%), followed by locals (22.8%), South Africans (8.3%) and the French (8.4%). Tourists from Germany, Austria and Switzerland are exceeding pre-pandemic occupancy rates, and tourists from the rest of the world are near to reaching pre-pandemic levels.
In May 2023, the inflation rate for accommodation services and catering in Namibia showed a moderation, with both categories recording an annual increase of 6.7% y/y. This is in contrast to the inflation rates recorded a year ago, where accommodation services experienced a significant rise of 14.6% y/y, and catering saw a more modest increase of 3.6% y/y .
Numerous specials and packages offered to locals to attract visitors during the pandemic provided a low base for accommodation services in 2020 and 2021. During 2022 when inflationary pressures rose, accommodation establishments had to increase prices as a result of higher food, electricity and fuel prices, leading to double digit inflation rates in recent months.
“Namibians have been facing a notable surge in travel expenses, with prices nearly doubling in May 2023 compared to the same period in the previous year, where holiday packages experienced an increase of 99.2% y/y. In May 2022, the increase in travel prices stood at 14.7% y/y. Local travel agencies indicate that this steep rise is primarily driven by increased flight costs for various destinations, particularly for routes dominated by a single airline. Additionally, there has been a general increase in demand for air travel, especially from business travellers associated with projects related to oil, green hydrogen, and other industries according to travel agents we engaged with,” Bock said.
Tourist inflows into Namibia have shown signs of improvement, reaching 68% of the pre-pandemic passenger arrival levels. In April 2023, there was a notable increase of 34.2% y/y in arrivals to Namibia. However, departures saw a significant decrease of 25.6% y/y in April 2023, leading to a net 4.1% y/y drop in passenger numbers. Although, on a monthly basis there was a net increase in total passengers by 13.1% m/m. Nevertheless, there remains a positive trend in arrivals which is more crucial to the local tourism industry.
“Many analysts expected a decrease in international travel and so tourism inflows given the widely held view that the US and other advanced economies would be in recession. Halfway through 2023 and this has however not taken shape as yet. Contrary to consensus views, we remained positive on the tourism sector as per our Economic Outlook 2023 report (released in January 2023) given that we expect the average middle to high income European households to still travel despite their country being in recession.
“According to the Hospitality Association of Namibia (HAN), there is a growing market for camping but difficult to retrieve these statistics. Indeed, conversations we had with hospitality establishments in the South of Namibia indicate that demand for camping is strong and growing, especially from South African travelers. We still believe that the tourism sector will be a significant growth driver of the economy in 2023, supporting job creation and complementary industries,” concludes Bock.