Kenya's 2012 tourism earnings to dip on euro crisis, attacks

NAIROBI Fri May 18, 2012 10:10am EDT

NAIROBI (Reuters) - Kenya's white sandy beaches look set to have fewer visitor footprints meandering over them this year.

While this may be good news for Europeans seeking escape from economic storms at home, it is bad news for Suresh Sofat's tour firm and other Kenyans hoping to cash in on hard currency earnings - especially after 2011 was year of plenty for them.

Sofat, 73, who runs Somak Travel, a 44-year old family business, now sees a difficult time ahead after the euro crisis and deadly attacks blamed on al Qaeda-linked militia have seen travel bookings fall sharply.

Tour operators also fear the upcoming elections in east Africa's biggest economy may cloud the outlook even further.

One of Kenya's major foreign earners alongside tea and horticulture, tourism took a record 98 billion shillings ($1.19 billion) in 2011 driven by visitors from Britain and the United States - the main source market for Kenya.

A dip in the industry's fortunes could soon blight the lives of ordinary Kenyans who rely on the sector for earnings, especially at a time of stagnation in other sectors such as property construction.

Britain, the United States and Australia have warned off their citizens following the killing of tourists in the coastal resort of Lamu. Travel bookings from the UK plunged 61 percent in the first quarter of this year alone.

"Summer bookings are down as well. You can basically take that as a reflection of the rest of the year," Sofat said.

Sofat now estimates he could bring in about 7,000 Britons to Kenya this year, down from 11,000 in 2011.

In response to the kidnappings and other cross-border attacks, Kenya sent troops into Somalia in October to root out the Somali group al Shabaab, blamed for the attacks.

The militants immediately vowed to retaliate against the incursion. Since then, a wave of grenade explosions have killed more than ten people in the Kenyan capital and the coastal city of Mombasa, a popular holiday destination for foreigners.

ELECTION JITTERS

Worsening the outlook for the rest of the year, are heavy rains that have wrecked roads, preventing hundreds of tourist from accessing the world-famous Mara Reserve this week.

More long-term worries linger though. There are concerns over a resurgence of the violence that erupted following a disputed presidential election in 2007.

Within the next 12 months, Kenya is set to hold its first national elections since the fighting, which disrupted business and travel, killing more than 1,200 people.

"Considering what happened in 2007 and that our politicians have not changed their language, there are fears about violence," said Mike Macharia, chief executive officer of the Kenya Association of Hotel Keepers & Caters.

"We have bookings up to around October. From November onwards, because there is no guarantee of what will happen, people have decided to give it a miss and wait and see."

An ICC trial was the biggest threat for a repeat of unrest at the 2013 vote, Kenya's electoral head said last month.

Four prominent Kenyans, including two leading presidential hopefuls, stand accused of fuelling post-election violence in 2007. If the presidential hopefuls are blocked from running for office, it may trigger violence.

Following the violence, tourism earnings tumbled 20 percent in 2008 to 52.7 billion shillings.

"At the moment, we are around 50 percent for December, 2012 and at this point ordinarily we should be at 80 percent, going to fill up," said the hotel keeper's head Macharia.

CONFERENCE TOURISM, CHINA

Although most tourist visit Kenya for its wildlife and white sandy beaches, business traveler numbers to east Africa's number one economy are rising.

Mahmud Jan Mohamed, chief executive officer of TPS Eastern Africa, said the hotels were worst hit in bookings mainly from the UK, due to the contagion of the euro zone crisis.

Jan Mohamed said hotels were still hopeful that business travelers would help counter the decline in tourists.

"Corporate activity (business travelers) is fine. It's in the leisure activity where we have seen a decline of between 20-25 percent," said Jan Mohamed.

Of the 2,500 rooms in Nairobi, business tourists accounted for about 80 percent of the total bookings, the hotel keepers association said, adding that three new hotels are opening in Nairobi this year, with a total of 500 rooms.

Sofat's hope is to rein in the decline in tourist numbers by diversifying to Asia. "Asia and U.S. are strong markets. We are increasing our market share to maintain the numbers that are falling from the UK."

($1 = 83.2500 Kenyan shillings)

(Editing by James Macharia)