Mauritius: Why the Hotels and the Government CAN't see eye to eye

Prime Minister Pravind Jugnauth on Sunday said that his government was under pressure from the tourism industry over the manner and the pace with which the country is re-opening its borders since they have been closed since March following the Covid-19 outbreak. Why are the government and the tourism industry not on the same page?

"At the level of government we are under a lot of pressure from this sector," Prime Minister Pravind Jugnauth said during an event in Grande-RivièreNord-Ouest on Sunday. He was referring to the tourism industry in Mauritius which is at loggerheads with the government over the pace and manner in which it is re-opening the country for tourism after it closed itself off back in March following the outbreak of Covid-19 in the country, bringing down tourism, which accounts for nearly a quarter of GDP and directly employs no less than 44,000 people.

"We have not been operating commercially since mid-March," Jocelyn Kwok, CEO of the Association des Hôteliers et Restaurateurs de l'île Maurice (AHRIM) tells l'express. With tourism being ground to a halt, major players in the sector have been compelled to turn to the Mauritius Investment Corporation (MIC) - a subsidiary of the Bank of Mauritius supposed to pump in Rs80 billion into financially struggling large corporations - for a financial lifeline including Sun Ltd that got Rs3.1 billion, Lux Island Resorts Ltd that got Rs1 billion and New Mauritius Hotels Ltd that's looking to get Rs6 billion. The problem for the sector is that things aren't looking to get better anytime soon.

Back in June, Kwok explains, we were seeing a slowdown but now we see lockdowns in Europe, which accounts for 60 percent of our tourism, again and the situa- tion in major regional markets such as Reunion and South Africa are not much better. "It's unlikely that there will be much of a recovery until a vaccine is made available to travelers, it seems that more than one vaccine may be approved in the first half of 2021 but it will take time to vaccinate enough people to build up a critical mass in our historical markets," says Megh Pillay, former CEO of Air Mauritius. The International Monetary Fund this month forecasts lean years ahead with international tourism not returning to 2019 levels before 2023.

Different strategies

The fears in the tourism sector are not about 2021, but the longer term. And one reason for the disagreement between the tourism sector and the Mauritian government is the fact that Port-Louis seems to be embarking on a different strategy in how to re-open itself to tourists as compared to regional competitors such as Seychelles and Maldives. To come to Mauritius right now the government demands a negative PCR test result for Covid-19 and a mandatory 14-day quarantine. "The average tourist comes for just 10 or 11 days, so it's completely mad to expect them to stay in quarantine for 14 days," José Arunasalom, a former tourism minister says to l'express.

The issue is that it's also totally at odds with what the governments in Maldives and Seychelles are doing. The Maldives reopened itself for tourism back in July with no quarantine requirements. Sey- chelles, on the other hand, relied on a study coming out of Johns Hopkins University in March that showed that Covid-19 symp- toms appear within 5 days of infection to set their quarantine period at just five days when it opened its borders to international tourism in August. In Mauritius, by contrast, "we have opted for the most stringent control on incoming travelers, the health protocols have remained very strict and have not changed since the beginning," Kwok argues.

"At the level of our industry we have proposed some protocols to encourage tourists to return which at the same would maintain a protective shield between incoming tourists and the local population for the first 14 days. Right now the health protocols are incompatible with the recovery of the tourism industry." Maldives and Seychelles can afford to be more open, Pillay argues, "both are far more dependent on tourism than Mauritius and it's easier for them because their smaller populations and the fact that both countries are made up of discrete islands that can be readily isolated from one another," but he says, "there are certainly ways of reviewing or shortening the current quarantine requirements for Mauritius."

"Between 2009 and 2018, tourist arrivals to Mauritius saw a compounded average growth of 6.7 percent but Seychelles and Maldives were growing much faster at 14.4 percent and 14 percent respectively."

The other reason why there is disquiet within the Mauritian tourism sector is that since 2010, Maldives and Seychelles as competing tourism destinations were already giving Mauritius a run for its money since at least 2010. And with both of them opening up while Mauritius continues to stay closed, the more Mauritius will lose out. "Mauritius was once seen as a leader in tourism in the Indian Ocean, but it is now lagging," says Arunasalom. He points to falling hotel occupancy rates - from 77 percent in 2017 to 70 percent in 2019 - or the fact that the average tourist spends more in Seychelles and Maldives than in Mauritius: in 2017 the average tourist spent $1300 in Mauritius, $1400 in Seychelles and $1980 in the Maldives.

Another indicator of Mauritius' tourism industry running out of steam is arrival numbers. According to AHRIM's annual 2018-2019 report, between 2009 and 2018, tourist arrivals to Mauritius saw a compounded average growth of 6.7 percent but Seychelles and Maldives were growing much faster at 14.4 percent and 14 percent respectively. More than double the growth rate to that of Mauritius. In fact, in 2013, the Maldives for the first time officially got more tourists than Mauritius and since then, the disparity in tourist arrival numbers between the two has only grown. Pillay, however, points out, that Mauritius "does not fish in the same ponds as the Maldives and Seychelles" elaborating that Mauritius' tourists tend to be mainly European while the Maldives has relied more on Chinese and Russian tourists to pick up its numbers.

Despite this, what is undeniable is that there was already an alarm about Mauritius' tourism industry even before Covid-19. In 2019, for example, for the first time in decades, tourism numbers in Mauritius fell by 1.1 percent. The last time Mauritius saw its numbers drop was in 2009 when tourism numbers dipped by 6.4 percent. But that was ascribed to the 2008 financial crisis that hit Europe hard and a Chikungunya outbreak. At that time Seychelles and Maldives also saw their numbers drop. In 2019, however, there was no global financial contagion and Mauritius was seeing its numbers go down, while Seychelles and Maldives saw robust growth. Something was going wrong with the Mauritian tourism industry even before Covid-19.

One culprit was erratic airline connectivity. New airlines servicing Mauritius came and went quickly; KLM Royal Dutch Airlines, partnering with Air Mauritius, started flying three times to and from Amsterdam, a major European European travel hub in 2017 only to stop in October 2019. In 2018, Air Mauritius stopped flights to Guangzhou, Chengdu, and Dar es Salaam. It stopped flights to Wuhan after only flying there between August and October 2018. It pulled out of European airports such as Rome, Milan, Frankfurt, and Geneva and halved the frequency of its flights to Heathrow from six flights a week to just three. "The route changes by Air Mauritius seem to have been dictated mainly to cut costs rather than judiciously optimizing its network to generate higher volumes of business," explains Pillay. With Air Mauritius accounting for no less than 45 percent of all the seats on flights coming to Mauritius, these decisions had a direct effect on the tourism sector locally, which could only keep its fingers crossed and hope that the decisions taken within the boardroom of Air Mauritius would not hit them too hard in terms of tourist arrivals.

Arunasalom points to the other culprit: the industry not keeping up with an evolving market. The Maldives, for example, relied extensively on social media to promote itself in growing markets such as China. "In Mauritius however the industry has been slow to sufficiently incorporate online travel agencies and booking apps and still relies too much on traditional brick and mortar travel agencies," he argues. Also, he argues, all-inclusive travel packages and government policies prioritizing construction and investments in real estate development leading to environmental degradation meant that Mauritius was poorly placed to take advantage of the fast-growing tourism segments such as eco- and cultural tourism. This too was something that was getting noticed. According to government surveys of tourists after they had completed their stays in Mauritius, in 2016 only 1 percent said that they would recommend visiting Mauritius to their friends and relatives. In 2017, that number had grown to 10 percent. Not a small matter in a country where 54 percent of tourists say they come because it was recommended by their friends. "Not much has been done to address any of this," concludes Arunasalom. All this is to say that the tourism industry was already worried long before Covid-19 emerged.

The problem deepens

Added to this is the fact that what the government is proposing is not exactly reassu- ring for the tourism sector. On 23 October the government announced that it is introducing a new 'premium' visa system to attract people on a year-long visa to work remotely while being based in Mauritius and retirees who were looking to move to Mauritius before the Covid-19 pandemic hit. "It's a laudable initiative and we hope it will be successful and the current 14-day quarantine is not incompa- tible with visitors coming to stay a long while," says Kwok, "but the number of such visitors coming to Mauritius is not significant." Just how insignificant? According to Statistics Mauritius, in 2018 only 7,514 visitors were coming to Mauritius that stayed for three months or over; the kind of long-stay visitors that the premium visa is intended for. That's just 0.55 percent of all the visitors that came to Mauritius that year. If the premium visa is intended as a lifeline for the tourism sector, that's not even a drop in the bucket. For Arunasalom the problem is that "even retirees coming here won't come just like that, they will calculate the pros and cons before deciding to stay here for a long time, for example, what happens if there is a medical emergency and how easy it would be to able to travel out of Mauritius."

That brings us to Air Mauritius. Little is clear about what's going on with the national airline which has done much of the heavy lifting (accounting for 47 percent of the seating capacity out of the 20 or so airlines coming to Mauritius) in terms of bringing the tourists in. After years of losses and the Covid-19 pandemic bringing international travel to a halt, Air Mauritius was officially put into voluntary administration back in April. At present, it's just mainly running repatriation flights to Reunion, Paris, and Dubai as well as carrying cargo. Back in June one of the administrators of the airline, Sattar Hajee Abdoula floated the possibility of the airline cutting down on as much as 50 percent of its staff. It's unclear whether or not once it emerges out of its administration how many of its previous network of 31 destinations it will service or even when it will start flights on the bulk of its network. "Nothing is coming out of Air Mauritius, so we just have to wait, unfortunately," laments Kwok.

The problem is that the longer the Mauritian government gives no signal to the sector within Mauritius or, indeed, potential tourists outside, the more protracted the pain will be. "What will happen in 2021 is anybody's guess," the CEO of AHRIM offers. Pillay says that bookings to Mauritius may be down because of the depressed state of the international travel industry, but even provisional bookings for next year require some time and some advance notice, "usually a year in advance," he adds. Should the government continue to stay silent about when the tourism industry will remain closed in Mauritius even until December, Kwok illustrates, then that would mean missing out on tourism until the Easter period next year, "in short, a proper recovery can only be expected only as from October 2021."

In the meantime, the fear is that with Mauritius staying out of the market and with no indication to travel agents or booking companies when Mauritius will reopen for business, tourists will simply be redirected to Seychelles and Maldives, that are eager to pick up tourists at this time, instead.

This is the long game that the tourism industry fears. Unlike Mauritius, the governments of Maldives and Seychelles have not turned their backs on tourism. "Right now the numbers might not be spectacular," says Kwok, 1,600 tourists went to Seychelles and 9,600 to the Maldives in September, "but they are commercially available now and they will only continue to strengthen their market positions at the expense of Mauritius which everybody will see once things pick up again, many still believe that we are in a league of our own, that's not true anymore, we have to fight for every single arrival and the longer we stay out of business the more people wanting to come to Mauritius will simply be redirected to Seychelles or Maldives."

While the government frets over Covid-19 and a second wave, the tourism industry is looking much farther down the line. This is why the pressure on the government is not likely to be let up anytime soon.

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