Tourism: Cash Cow Begins To Look Vulnerable

To cater for Chinese tastes, another hotel group, Veranda Leisure & Hospitality, recently began offering dim sum and congee (rice porridge) on its breakfast menu, green tea instead of fruit cocktail as a welcoming drink.

For years, Mauritius has positioned itself as an upmarket destination catering primarily to Europeans, who still account for about two-thirds of tourists. But with many west European countries in recession, arrivals are tailing off, even as numerous hotel rooms become available.

The tourist industry, once seen as a reliable cash cow, looks as vulnerable as sugar or textiles in years past – too reliant on one market niche and slow off the mark in exploiting new ones.

 “Our tourist industry is extremely eurocentric and, given what’s happening in Europe, we are suffering big-time,” says Gilbert Espitalier-Noël, director of ENL, a family conglomerate with interests in Veranda and in Beachcomber, the largest hotel group.

So after seeing regional neighbours such as the Maldives attract visitors from China, Mauritius is belatedly trying to do the same.

In 2006, before the financial crisis, the country set itself a target of doubling annual tourist numbers to 2m by 2015.

That target now looks unrealistic, and some analysts say the country’s hotel construction spree was ill-advised. Last year, it hosted just under 965,000 tourists, a 3 per cent growth rate on 2010, but much less than the 18 per cent growth seen in Maldives or 11 per cent in Seychelles.

In the first half of this year, arrivals were flat at just over 467,000. Visitors from Europe dropped by 6 per cent in the same period.

 “With diversification progressing at a snail’s pace, Mauritius remains highly vulnerable with Europe sliding back into recession,” a recent report on the tourism industry published by Port Louis-based Axys Stockbroking concludes.

The murder last year of an Irish woman on her honeymoon, for which two hotel workers were tried and later acquitted, cannot have contributed to the country’s image as a holiday spot.

Mauritius’ share of the Indian Ocean tourism market plunged from a dominant 41 per cent to 33 per cent in 2009-11, roughly the same share as Maldives, the brokerage says.

Occupancy at some three- to five-star hotels has been dropping this year, hotel companies say. This has prompted a round of discounting that hoteliers warn could endanger the country’s reputation as an exclusive place to visit.

 “The Mauritian destination is caught in a dangerous descending spiral,” Herbert Couacaud, Beachcomber’s chief executive, recently warned colleagues in an internal newsletter. “It is paying the price for a fire sale that has transformed the country into a discount destination with a loss of identity, leading even tour operators to look for other destinations to guarantee their growth.”

Tourist companies are working to reverse this, redirecting their promotion budgets to new markets such as China, or expanding industry segments such as golf tourism.

While China is the biggest prize, the industry is also setting its sights on other markets, including Russia and India.

Wedding parties held by wealthy Indians, who have been known to book entire hotels or flights for a weekend, are seen as the biggest windfall.

Many hoteliers complain that a shortage of flights, including those offered by the lossmaking national carrier Air Mauritius, is hampering the industry.

They are pressing for more connections to China in particular, saying that Air Mauritius needs to add more flights, or the government needs to open air access further.

 “There’s not enough seat availability compared to the hotel capacity,” says Francois Eynaud, chief executive of Veranda and president of the Association of Hoteliers and Restaurateurs.

However, Air Mauritius and some government officials dispute this, saying that adding more flights for which there is not enough demand will not help.

The airline has vowed to work with the industry to attract more tourists from China.

That is beginning to happen. This month, the airline joined Mauritian hoteliers on a trip to China aimed at ensuring enough commitments from tour operators to fill more flights.