BMI View: The Mauritian tourism sector, a pillar of the economy, continues to report sluggish growth as visitor numbers from key European markets such as France decline. Growing numbers of Asian visitors, in particular Chinese, will support the industry, though it will be some time before the difference in revenues is made up.
The year-to-date Mauritius tourism arrivals figures to the end of August would suggest that sluggish growth and economic contraction in Europe will continue to constrain the sector's recovery. Growth in Asian arrivals is impressive, in particular those from China, underlining the success of government aims to increase integration with this market and reduce dependence on Europe. We caution, however, that this is no quick fix for the Mauritian economy, and Asian visitor numbers still make up a slight proportion of the whole when compared to those from Europe.
Visitor Numbers Record Sluggish Growth
Year-to-date visitors to Mauritius to the end of August numbered 622,492, marking growth of 2.2% over the same period in 2012. This sluggish pace of growth over the eight-month period will be disappointing to the struggling sector, one of the backbones of the economy. We note that August itself saw year-on-year (y-o-y) growth of 11.5%, from 65,896 to 74,454, which lends hope to the government's target of 980,000 tourist arrivals by the end of 2013. This figure, however, announced on August 21 on the back of H1 data, was itself was a downwards revision from the previous government forecast of 990,000. Further, in the first half of the year, despite visitor numbers having risen by 1.0%, the Bank of Mauritius estimates that tourism receipts fell by 6.3%, from MUR23,548mn to MUR22,055mn. Hotel room occupancy rates over the period were 60%, flat on that seen in 2012.
|January To August Visitor Numbers To Mauritius, 2012 & 2013|
Troubles in the European economies, still emerging from the global economic crisis, are weighing heavily on growth in Mauritian tourism. The European market provides the bulk of custom for the Mauritian tourism sector; of 965,441 tourist arrivals to the country in 2012, 58.1% of them hailed from Europe, compared to 27.5% from Africa and 10.8% from Asia. Tourist arrivals from Europe over the January to August 2013 period have fallen by 2.9% y-o-y, tying in with the broader macro outlooks for those countries. In France we forecast that 2014 will see real GDP growth of 0.5%, following flat growth in 2013, while in Italy we forecast growth of just 0.3%, from a 1.5% contraction in 2013. Visitor numbers from these countries so far this year have fallen by 6.0% and 26.7% respectively. Given that France accounted for 27.1% of all visitors in 2012 (despite numbers having dropped by 13.2% that year) this should be of concern.
We note that those European countries where we forecast positive economic growth in 2013 are generating growth in arrivals in Mauritius - the UK, where we forecast growth of 1.1% has seen a pickup in tourist arrivals in Mauritius, and from Germany - 0.5% growth forecast - visitor numbers have risen by 8.4%. These have not been sufficient to offset the drag from France and other European states where our outlook is less sanguine, however.
Turning To China
The overall Mauritian arrivals have managed to secure positive growth through the impressive expansion in Asian arrivals, which are up 28.5% y-o-y. This has been driven in particular by growth in Chinese arrivals, which have nearly doubled over the year, climbing 93.9% to 26,047. This is still less than those arrivals from India (up 7.4%), which hit 40,330 by the end of August, highlighting the historic links between Mauritius and the subcontinent. Nevertheless, this growth in Chinese numbers is impressive, and is the vindication of an active policy by Mauritius to attract more Asian visitors, in particular from China, in an effort to reduce dependence on Europe.
|Asia Growing As Europe Falls|
|January To August Visitor Arrivals By Top Origins, 2011 (LHS) & 2012 (RHS)|
National flag carrier Air Mauritius has this summer launched direct flight routes between Mauritius and Beijing, which followed the January launch of a direct flight route to Shanghai. Given the impressive rise in visitor numbers from China this strategy is already bearing fruit, and is picking up pace - August numbers were up 133.5% on August 2012.
Are Asian Visitors Sufficient?
It remains to be seen whether the Asian market will be sufficient to plug the gap left by the decline in European visitor numbers, despite its rapid growth. The recovery in the key European markets is set to be sluggish at best - in France we forecast that growth will average just 1.1% over our medium-term forecast period to 2017 - and it appears unlikely that there will be a surge in visitor numbers from here in the coming years, leaving a significant deficit to be filled by markets such as China.
The growth so far in 2013 would suggest that these numbers can be attracted. However, it is not certain that revenues generated by Asian visitors will be of the same value as those from their European counterparts. European visitors to Mauritius are often high-end spenders on honeymoons and other luxury breaks, and spend two weeks on the island nation. By contrast Chinese visitors are more likely to be on shorter breaks. As noted above, despite the H1 rise in visitor numbers, it is estimated that receipts had actually fallen.