The Uganda Hotel Owners’ Association (UHOA) has asked the government to reinstate the tax breaks that it scrapped recently.
In a letter to Finance Minister Dr Ezra Suruma, the Association said the suspended incentives should be left available for hotel development outside the Kampala-Entebbe corridor to facilitate the completion of a full tourism circuit.
“We are talking about a strategy of developing Uganda as a conference destination to boost capacity utilisation after the Commomwealth Summit, but the truth is that if you had 200 guests leaving Kampala to visit a national park, you don’t have the capacity to handle that volume of traffic out there,” said UHOA executive director Ismail Sekandi.
As part of incentives to help the industry build capacity for hosting the November 2007 Commonwealth Heads of Government Meeting (CHOGM), the ministry suspended value added tax and import duty on construction materials destined for CHOGM-related hotel projects.
While presenting the 2007/08 budget, however, Dr Suruma announced that the incentives had achieved their purpose and were being terminated from July 1.
He allowed a transition period up to December 31, when the last batch of goods under the incentives regime are expected to have been cleared.
In its letter, UHOA is also pleading against a flat deadline for all stakeholders, arguing that while capacity has been indeed been boosted in Kampala, there are still a number of developers yet to get their tax exemption certificates approved by the ministry.
Mr Sekandi said further that while infrastructure had largely been addressed, the industry will still need incentives as it now has to build the human resource capacity to ensure acceptable service levels.
“It is one thing to have a five-star building and another one to deliver five-star services. All these factors have to be taken into account when evaluating what kind of incentives should be extended to the industry and for how long,” Mr Sekandi said.
With room capacity in Kampala expected to have doubled to nearly 7,000 by the time of the CHOGM meeting, stakeholders have been examining the different post-event scenarios to see how best to maintain reasonable occupancy rates, which averaged 46 per cent across the industry before the new additions.
Various players say that with the additional capacity, the country is now in a position to launch into the lucrative meetings incentives, conferences and events (MICE) market.
Indeed, a company called MICE Uganda has been set up specifically to target this market.
This will help counter the seasonal dips in arrivals and ensure even capacity utilisation throughout the year, they say.
Pierre Declerk, Brussels Airlines manager for Uganda, says the summit will be good publicity for Uganda and the excess hotel capacity and ongoing improvements to infrastructure ahead of the event, will create the right conditions for Uganda to position itself as a MICE destination.
“MICE will help to plug the gap between seasons and offer more even traffic flow for airlines,” he said. “This not only good for us as carriers but will also benefit players at the low-end of the industry.”
Uganda typically has one major tourist season running from July to September, followed by short spikes around the Christmas and Easter holidays.
In between, business is lean and worries have been expressed about capacity utilisation following a doubling in bed capacity in preparation for CHOGM.
Mr Declerk, whose airline will be increasing its flights to Uganda shortly after CHOGM, has proposed that all carriers to Uganda support destination marketing of Uganda in their home countries and give discounted travel to conference travellers during the low season to attract numbers.
“We are going to partner with MICE Uganda to see that we bring as many conferences to Uganda as possible,” he added.
MICE Uganda chief executive Barbara Vanhelleputte said preparations for CHOGM had largely put in place many of the pre-requisites that Uganda needed to position itself as a congress country.
“I think the basics are there; we have certainly enjoyed peace for a long time now and infrastructure in terms of quality accommodation, airline connections, good roads and telecommunications is all falling into place,” she said.
Ms Vanhelleputte said conferences and events had become a new front in the battle for tourist dollars because a lot of money is left behind at the destination from expenditures by delegates, especially from pre and post-event tours.
MICE Uganda is targeting incentive and business travel to Uganda, encouraged by the growing number of multinational corporations setting up shop in the country.
“These corporates have a certain level of need, which is basically executive level meetings and seminars whose organisation they would be happy to delegate to a competent handler so that they can continue to focus on their core activities,” Ms Vanhellputte said.