Hospitality Industry in Tanzania_HAT Presentation to Hon. Minister Prof Rev1
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This document summarizes a meeting between the Hotels Association of Tanzania (HAT) and the Ministry of Natural Resources & Tourism. HAT represents 119 member facilities with over 5,000 rooms. Tourism in Tanzania is growing, but high taxes and fees mean much money leaves the country after visitors arrive. HAT requests solutions to make the industry more profitable so it can continue growing jobs and the economy. The government is considering tax reforms to support sustainability and competitiveness. Opportunities exist to develop coastal and southern tourism circuits and expand visits to Wildlife Management Areas.
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Hospitality Industry in Tanzania_HAT Presentation to Hon. Minister Prof Rev1
- 1. ENGAGEMENT MEETING WITH HON. MINISTER PROF. JUMANNE MAGHEMBE, MINISTRY OF NATURAL RESOURCES & TOURISM
- 4. About the Hotels Association of Tanzania Tourism Trends The Good News The Bad News From Issues to Solutions Final Steps
- 5. 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
- 6. Some of the many locations where HAT Members offer accommodations TOTAL 119 Members 232 facilities 5,951 rooms 11,177 beds SerengetiSerengetiSerengetiSerengeti &&&& GrumetiGrumetiGrumetiGrumeti 45 facilities45 facilities45 facilities45 facilities 856 rooms856 rooms856 rooms856 rooms 1654165416541654 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 1033103310331033 bedsbedsbedsbedsTangireTangireTangireTangire NPNPNPNP 9999 facilitiesfacilitiesfacilitiesfacilities 184184184184 roomsroomsroomsrooms 377 beds377 beds377 beds377 beds Mafia IslandMafia IslandMafia IslandMafia Island 5555 facilitiesfacilitiesfacilitiesfacilities 63636363 roomsroomsroomsrooms 146 beds146 beds146 beds146 beds RuahaRuahaRuahaRuaha 7 facilities7 facilities7 facilities7 facilities 101101101101 roomsroomsroomsrooms 215 beds215 beds215 beds215 beds DarDarDarDar eseseses SalaamSalaamSalaamSalaam 25 facilities25 facilities25 facilities25 facilities 1789178917891789 roomsroomsroomsrooms 2908 beds2908 beds2908 beds2908 beds SelousSelousSelousSelous 13 facilities13 facilities13 facilities13 facilities 148148148148 roomsroomsroomsrooms 313 beds313 beds313 beds313 beds KaratuKaratuKaratuKaratu////ManyaraManyaraManyaraManyara 15 facilities15 facilities15 facilities15 facilities 445445445445 roomsroomsroomsrooms 890 beds890 beds890 beds890 beds TangaTangaTangaTanga,,,, PanganiPanganiPanganiPangani,,,, SaadaniSaadaniSaadaniSaadani,,,, UsambaraUsambaraUsambaraUsambara, Amani &, Amani &, Amani &, Amani & BagamoyoBagamoyoBagamoyoBagamoyo 16 facilities16 facilities16 facilities16 facilities 250250250250 roomsroomsroomsrooms 567 beds567 beds567 beds567 beds KataviKataviKataviKatavi &&&& MahaleMahaleMahaleMahale 3333 facilitiesfacilitiesfacilitiesfacilities 44444444 roomsroomsroomsrooms 78 beds78 beds78 beds78 beds MikumiMikumiMikumiMikumi NP,NP,NP,NP, MorogoroMorogoroMorogoroMorogoro,,,, MufindiMufindiMufindiMufindi &&&& UdzungawaUdzungawaUdzungawaUdzungawa 7 facilities7 facilities7 facilities7 facilities 131131131131 roomsroomsroomsrooms 228 beds228 beds228 beds228 beds GombeGombeGombeGombe,,,, KigomaKigomaKigomaKigoma &&&& RubondoRubondoRubondoRubondo 3333 facilitiesfacilitiesfacilitiesfacilities 15151515 roomsroomsroomsrooms 31 beds31 beds31 beds31 beds WMAs 21 facilities 352 rooms 709 beds
- 7. 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
- 8. Tanzania More 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!
- 9. From Booking to ToursFrom Booking to ToursFrom Booking to ToursFrom 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
- 10. From PurchaseFrom PurchaseFrom PurchaseFrom Purchase Overseas to MoneyOverseas to MoneyOverseas to MoneyOverseas to Money Entering TanzaniaEntering TanzaniaEntering TanzaniaEntering Tanzania At long last, I have 8 days8 days8 days8 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% commission24% commission24% commission24% commission and booked with the On Safari Agency. Mike called me to book Joes Trip. He paid $6080paid $6080paid $6080paid $6080. I deducted my 14%14%14%14% commissioncommissioncommissioncommission and I transferred $5228transferred $5228transferred $5228transferred $5228 to the Serengeti Lodge. $5228 to$5228 to$5228 to$5228 to TanzaniaTanzaniaTanzaniaTanzania
- 11. What happens whenWhat happens whenWhat happens whenWhat happens when the money entersthe money entersthe money entersthe money enters TanzaniaTanzaniaTanzaniaTanzania Ok, On Safari sent me $5228 for Joes 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 yilets see what we have to pay. Im all for paying our fair share, but this is painful. Lets do the math. Serengeti Lodge Serengeti Lodge Ok, I start with $5228start with $5228start with $5228start with $5228 and then pay VAT, TDLpay VAT, TDLpay VAT, TDLpay VAT, TDL and Park Feesand Park Feesand Park Feesand Park Fees , which leaves me with $4800$4800$4800$4800 $4800$4800$4800$4800 remainingremainingremainingremaining
- 12. What happens whenWhat happens whenWhat happens whenWhat happens when the money entersthe money entersthe money entersthe money enters TanzaniaTanzaniaTanzaniaTanzania I dont 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.
- 13. What happens whenWhat happens whenWhat happens whenWhat happens when the money entersthe money entersthe money entersthe money enters TanzaniaTanzaniaTanzaniaTanzania Sothe Lodge is good forSothe Lodge is good forSothe Lodge is good forSothe Lodge is good for Government: Over $1500Government: Over $1500Government: Over $1500Government: Over $1500 in payments from a singlein payments from a singlein payments from a singlein payments from a single visitors stay.visitors stay.visitors stay.visitors stay. It is also good for theIt is also good for theIt is also good for theIt 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 beBut a business is supposed to beBut a business is supposed to beBut a business is supposed to be profitable and the math is not addingprofitable and the math is not addingprofitable and the math is not addingprofitable and the math is not adding up well for me.up well for me.up well for me.up well for me. EitherEitherEitherEither I increase prices, which is goingI increase prices, which is goingI increase prices, which is goingI increase prices, which is going to make me less competitive, or I closeto make me less competitive, or I closeto make me less competitive, or I closeto 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. OrOrOrOr I work with HAT and the GovernmentI work with HAT and the GovernmentI work with HAT and the GovernmentI work with HAT and the Government to find Winto find Winto find Winto find Win----Win Solutions!Win Solutions!Win Solutions!Win Solutions!
- 14. 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.
- 15. In 2015 Tourism was reported to have earned US$2.2 billion / TZS 4.8 trillion. In 2014 Tourism contributed TZS8.2 trillion (14%) to GDP and will rise to TZS15.8 trillion by 2025 (13.2%). Tourism earned more in foreign exchange than Gold. Visitor Exports totalled TZS3.4 trillion (22%) and will rise to TZS5.7 trillion by 2025 (21%).
- 17. PolicyPolicyPolicyPolicy Product &Product &Product &Product & MarketingMarketingMarketingMarketing HumanHumanHumanHuman 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.
- 18. 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 the Community Wildlife Management Areas Consortium for communities to provide tourism services. ONLY 4 are working and benefiting the intended communities. Mafia Island - Tanzania is home to the 3rd largest Marine Park in the World.
- 19. 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
- 20. The Bad News! Weaknesses & ThreatsThe Bad News! Weaknesses & ThreatsThe Bad News! Weaknesses & ThreatsThe Bad News! Weaknesses & Threats PolicyPolicyPolicyPolicy Product &Product &Product &Product & MarketingMarketingMarketingMarketing HumanHumanHumanHuman 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
- 21. SUSTAINABILITY & COMPETITIVENESS Preservation of Natural Assets Business Climate Human Resources POLICY REFORMS
- 22. 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!
- 23. 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 Tanzanias elephants, lions and rhinos are being decimated through poaching.
- 24. 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.
- 25. 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
- 26. 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!
- 27. Overall, low rankings for Tanzanias 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).
- 28. All three issues are inter-connected! Unclear policies, institutions & regulations. Lack of Policy Coordination. Multiplicity of taxes, levies and fees.
- 29. 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
- 30. PolicyPolicyPolicyPolicy ReformsReformsReformsReforms thatthatthatthat Enable our Businesses toEnable our Businesses toEnable our Businesses toEnable our Businesses to sustainably growsustainably growsustainably growsustainably grow Build the capacityBuild the capacityBuild the capacityBuild the capacity of our institutionsof our institutionsof our institutionsof our institutions Build the capacityBuild the capacityBuild the capacityBuild the capacity of Tanzaniansof Tanzaniansof Tanzaniansof Tanzanians GovernmentGovernmentGovernmentGovernment + Private+ Private+ Private+ Private SectorSectorSectorSector CooperationCooperationCooperationCooperation From Issues to SolutionsFrom Issues to SolutionsFrom Issues to SolutionsFrom Issues to Solutions
- 31. 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.
- 32. 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.
- 33. 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.
- 34. 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 Everybodys Business! So the fewer barriers to business, the more benefits for Tanzania, Tanzanians and Businesses!