Unlocking growth: Significant infrastructure upgrades needed to bolster recovery efforts

Following a period of minimal activity due to political unrest, Côte d’Ivoire’s tourism sector is now showing signs of recovery. According to the World Travel & Tourism Council (WTTC), in 2012, the travel and tourism industry directly contributed CFA285.4bn (€428.1m), or 2.4% to GDP, with the figure set to rise by 3.6% to CFA295.6bn (€443.4m) in 2013. By 2014, growth in direct and total contributions to GDP is expected to average 5.2% per year until 2023, generating an estimated CFA488.6bn (€732.9m) and CFA963.5bn (€1.45bn) in 2023, based on constant 2012 prices. Meanwhile, direct and total jobs created in 2012 accounted for 2.1% and 4.2% of total employment, or 102,000 direct jobs and 208,500 total jobs, according to WTTC figures.

COMING & GOING: Foreign visitor export revenues were relatively constant between 2006 and 2012, varying between CFA61bn (€91.5m) in 2006 and CFA63.7bn (€95.6m) in 2012. Although the WTTC projects that visitor revenues will decline by 0.5% in 2013, increases are likely through 2023 when the figure is expected to reach CFA90bn (€135m) in constant 2012 prices, derived from 650,000 visitors. Source markets for Côte d’Ivoire include France, the Middle East and North Africa, and major African economies like South Africa and Kenya, while business tourism geared towards China.

Statistics for international tourist arrivals vary substantially; while the WTTC estimates that more than 300,000 visitors have entered the country annually since 2003, data from the state organisation Côte d’Ivoire Tourisme (CIT) put the number of tourists in 2008 at 205,152, rising to 289,191 in 2012. However, some local sector operators have questioned whether the country attracted as many as 200,000 tourists in 2012.

The recent rising Ivoirian visitor numbers have not recorded as tourists as they tend not to stay hotels or sightsee, Monique Philippe, director-general at Ivoire Tourisme Voyages, a local tour agency, told OBG. Disagreement over tourist numbers mostly stems from the categorisation system for visitors. Tourist calculations are determined by visitor forms collected at the airport, but these lack some details. This leaves business travellers and Ivoirians living abroad to check the “tourism” box as the purpose of their journey. In this light, the state’s aim of attracting 500,000 “tourists” annually by the year 2015 is seen by some to be premature. “The Ivoirian tourism industry has tremendous potential, but we have a lot of reconstruction work to do before we can speak of attracting even 200,000 foreign tourists annually. Currently, we do not even have the hotel capacity to house 500,000 tourists,” said Philippe.

Long-term forecasts remain optimistic, projecting the arrival of 587,000 international tourists in 2023 that would bring in revenues of an estimated CFA91bn (€136.5m). Roughly 60-70% of visitors to Côte d’Ivoire are of Ivoirian descent, including French and Lebanese Ivoirians, while about 25% of travellers visit on business.

BUSINESS VISITORS: Current spending trends support the popularity of business tourism over leisure tourism; in 2012, inbound and domestic leisure travel expenditures accounted for 37.2% of tourism’s direct contribution to GDP, as compared to a 62.8% share for business tourism. Annual leisure tourism revenues are projected to go up from CFA233bn (€349.5m) in 2012 to CFA411.1bn (€616.7m) in 2023, expanding 5.2% annually beginning in 2014. Business tourism will continue to represent the majority of tourism expenditures, rising from CFA393.4bn (€590.1m) in 2012 to expand 5.1% annually beginning in 2014 and peaking at CFA677.3bn (€1.02bn) in 2023.

Conference space capacity, such as at the auditorium of the Palais des Congrés in Abijdan, has added appeal. Marie-Reine Koné, CEO at Afric Voyages, a local tourism agency, told OBG, “Abidjan is becoming a regional hub again, a process which will fuel business tourism. Many business conferences and seminars have already been organised for the coming years, and once our local capabilities are restored, the next step will be to develop tourism in the classical sense of sightseeing.”

ASSETS: Sporting a diverse landscape with coastline, mountains, forests and savannahs, Côte d’Ivoire’s physical attributes have the potential to attract many tourism niches, from foreigners interested in visiting the beaches of San Pédro and Assinie to travellers looking to see the chimpanzees of Taï National Park that utilise tools to forage for food. The country has eight national parks, including Comoé National Park, home to lions, elephants and buffalos, and the marine park on the Ehotiles Islands in the Aby Lagoon. Côte d’Ivoire has 19 administrative regions with more than 60 languages and a multitude of culinary, musical, artistic and religious traditions unique to the West African country.

“Côte d’Ivoire has excellent tourism potential, with long, beautiful coasts, mountains, forest in the south, savannah in the north and an abundance of fauna,” Georges Angama, general manager at the Golf Hotel, a luxury facility next to the Ébríe Lagoon, told OBG.

As a major agricultural exporter, the country also possesses significant potential for ecotourism, attracting travellers to visit cocoa, coffee and banana plantations. Though Koné notes that unlocking this depends on rehabilitating the transport infrastructure and encouraging involvement from big plantations.

Meanwhile, travellers interested in history can visit the UNESCO World Heritage site of Grand Bassam, which served as the French colonial capital in the late 1800s, while business tourists can be entertained by Abidjan’s restaurants and nightlife. Religious visitors can see the Roman Catholic basilica, the world’s largest church, in Yamoussoukro, the political capital.

INDUSTRY BACKGROUND: Despite a lack of organised political will to advance tourism, Côte d’Ivoire became a popular tourist destination in the 1990s due to the country’s geographical and cultural diversity, and attractions, enabling local tourism agencies to maintain significant revenues, particularly from European travellers.

As late as 1998, the country attracted 301,039 tourists, of which more than 73,000 came from France. However, political instability over the next decade stymied development and deterred tourists from visiting as the country. Their numbers were halved by political conflict and violent anti-French protests in 2004, which led to the departure of many expatriates.

Elections to resolve the unrest in 2010 revived hopes of expanding the tourism industry and plans existed to attract foreign investment through the creation of tourist zones with attractive tax reductions. However, the elections triggered additional violence, postponing the restoration plans. Almost 15 years of conflict led to the destruction of tourism facilities across the country, particularly in the rebel-occupied northern and western regions, and inflicted damage on major attractions such as Grand Bassam. During the 2010-12 crisis, major tourism promoters like the Société des Palaces de Cocody (SPDC) saw revenues drop by as much as 30% to 40%, while many others were shut down.

REGIONAL COMPETITORS: Côte d’Ivoire attracts many visitors from other African countries, as evidenced by the fact that as many as two-thirds of incoming air passengers in 2010 arrived from Ghana and Senegal, respectively. Yet, insecurity has also resulted in tourists opting to visit other African destinations instead, including Senegal, South Africa and Kenya, in particular. With fewer than 350,000 visitors in 2005, Côte d’Ivoire was considerably behind Senegal, which received around 770,000 tourists during the same year. In 2007, Kenya attracted 1m tourists through its safari parks, netting $800m in the process, while in 2010, Côte d’Ivoire generated just CFA100bn (€150m) annually. “It is true that other countries profited from the Ivoirian crisis, but I think that our offers are complementary. Each African country has very different assets to offer in terms of cultural, ecological and geographical tourism, ensuring opportunities for all of us,” Pascal Mahan, director of Lagoona Tours, a local travel group, told OBG.

SECTOR STRUCTURE: The International Air Transport Association (IATA), an international trade group of airlines that serves as a global accreditation body for travel agents, has certified 40 travel agencies in Côte d’Ivoire to sell airline tickets, although several agencies in fact operate without an IATA licence. Many agencies within the latter category are informal actors that provide small-scale sightseeing and car hire offers, presenting unfair, but limited competition to certified agencies.

Comprising about 20% of sector participants, the eight major tourism agencies represent around 80% of sector sales. While competition exists between these actors, most competition for revenue revolves around selling flights through Air France or other airlines.

Local sector players working with Air France include Ivoire Tourisme Voyages, Afric Voyage and SDV Voyages, respectively, while actors associated with other carriers include Capital Voyages and CTE Voyages et Tourisme. Sales with agencies affiliated with Air France tend to cater to corporate clients, while agencies promoting other airlines provide services for business clients, limiting competition between agencies. Yet, agencies face challenges from a growing number of businesses acquiring IATA certifications illegally. Obtaining an IATA licence obliges firms to meet several requirements, such as a bank guarantee, but agencies have worked around these criteria. Acquiring a government tourism licence has often thus been clouded due to a lack of regulation and transparency. To remain competitive vis-à-vis such enterprises, legal agencies have branched out into different tourism niches, leaving lower-profit tourism activities to the former firms.

HOTEL & SERVICE INFRASTRUCTURE: Following independence in 1960, the Ivoirian state built hotels in every region of the country, ensuring that each region had at least one facility. In the 1970s, public building efforts were replaced by the construction of private hotels. In 1997, Côte d’Ivoire had a total of 11,374 beds in 7786 hotel rooms, but sporadic conflict led to a deterioration in infrastructure. Estimates of hotel beds nationwide vary from 3000 to 10,000. Fighting destroyed most of the tourism infrastructure in the northern and western regions in particular. Most hotels are in Abidjan and include Pullman, Novotel and Tiama, which offer an estimated 2000-3000 beds in total. Only six of Abidjan’s hotels meet international standards, while others are in need of upgrades. Even so, the uptick in business tourism has led to 80-95% occupancy rates in the city’s hotels, though activity continues to remain low. “The hotel market in Abidjan is limited in that 80% is in the business segment, with the luxury offering currently under capacity,” Hamid Sidine, the general manager of Sofitel Abidjan Hotel Ivoire, told OBG.

Expansion efforts have become the main focus for Abidjan hotels as new players enter the sector. In July 2012 the SPDC penned an agreement with French company Accor to transform the Hotel Ivoire into a Sofitel, enabling Accor to manage the hotel for 15 years with the possibility of five-year extensions. Following the building work, Accor took over management of the renovated hotel in January 2013 for €4m. The Accor Group also maintains two Ibis hotels, as well as the Novotel and the Pullman. Hotels will face increased competition from the construction of facilities such as the Radisson Blu at Abidjan’s Port Bouet Airport (PBA) under Rezidor, a member of the Carlson Rezidor Hotel Group. The hotel will be built at PBA and offer 252 rooms, with amenities such as a business-class lounge, retail stores, and conference and seminar rooms. The hotel is expected to open in the third quarter of 2014.

In December 2012, the hotel group Onomo announced the opening of its new hotel, also at PBA, which is the company’s third hotel on the continent. At a cost of more than CFA4.6bn (€6.9m) to construct, the three-star hotel has 118 rooms, a bar, restaurant, meeting rooms and free Wi-Fi. London-based company Lonrho has also announced plans to address the shortage of modestly priced hotels in Abidjan by establishing budget hotels, though details regarding construction were not available at the time of publication.

TALENT: The modernisation of hotel infrastructure also requires investment in human resources. Inactivity during the conflict led to falling standards in customer service and 40 Moroccan hotel employees were brought in to train local staff operating the Hotel Ivoire in Abidjan. “Despite a youth unemployment rate of over 50%, employers often complain that they are unable to hire competent, well-trained young employees. Significant efforts will be needed to bring tourism staff up to international standards,” Philippe told OBG.

“Côte d’Ivoire has marvellous potential as a tourist destination. It not only has beautiful beaches, but it also offers a diversity of cultural and ecological attributes unparalleled in the region that have yet to be explored,” Koné told OBG. While the interior regions are home to cocoa plantations, forests and savannahs, areas that hold significant growth potential, this can only be leveraged with considerable investment in redeveloping transport and hotel infrastructure, Koné added.

In the spring of 2012, a delegation from CIT visited the United Arab Emirates (UAE), joining others to display the tourism potential of Côte d’Ivoire and to learn from the experience of the UAE in promoting its own tourism industry. Grégory Yao, deputy director of external promotion at CIT, told the media in 2012, “There is a diverse, wealthy population to target in the UAE that is in search of new destinations for leisure and vacation that Côte d’Ivoire could capture.”

The Ivoirian delegation participated in the Arabian Hotel Investment Conference and the Arabian Travel Market in 2012, enabling access to potential investors and other sources of funding needed for the construction and renovation of tourism infrastructure. Although short-term growth may be limited, the tourism industry is poised for expansion within the next five years.

INVESTORS: According to the WTTC, Ivoirian tourism attracted €54.3m in investment in 2012. While this is set to grow by 0.4% for 2013, investment potential may expand by 7.3% annually for the next 10 years to €110m by 2023, which represents 3.1% of total investment.

Recent reforms within the Investment Promotion Agency of Côte d’Ivoire, which is under the authority of the president, will reduce investment delays; the processing time to register interested investors has already fallen from 15 days to 48 hours. Nonetheless, incentivising investment will also require improvements in the banking industry, which offers high interest rates of between 12% and 13%. Some observers have criticised the role of banks in restricting access to credit for prospective investors. Borrowers are often required to mobilise as much as 30% of the capital needed for tourism-related projects, as well as to repay loans back within 10 years, thus creating high barriers to entry.

TRANSPORT: The deterioration of transport routes during the conflict had consequences for the tourism industry. Flights to interior cities were shut down and roads were destroyed or made unsafe by violence, inhibiting travel to the west and the north. “For 15 years there were no opportunities to renovate the roads. The government was unable to keep up with transport needs,” said Philippe. Redeveloping transport infrastructure is therefore one of the government priorities laid out under the National Development Plan 2012-15 (see analysis). Recovery efforts are ongoing, with construction of the 140-km highway from the south to Yamoussoukro set to be completed in 2013. Traffic circulation in Abidjan, and particularly for hotels in Cocody, will also be aided by the construction of a third bridge at Ebrie Lagoon. But work on other roads has been delayed, notably on the 368-km road connecting Abidjan to San Pédro meant to be completed in 2012 and on the highway linking Abidjan to Grand Bassam.

The launch of Air Côte d’Ivoire in November 2012 will facilitate travel to northern, western and eastern destinations, with flights to the interior expected to be launched during 2013. “Once our facilities are ready, tourists will be able to travel to Korhogo in one hour, as opposed to 10 hours of dangerous road travel,” said Philippe. “However, when the roads are intact, the country does merit visiting by road – it is a mosaic of coastal lands, plantations, mountains, savannah and forests.”

The tourism industry will also be encouraged by the launch of regular flights by several airlines in 2012, including Turkish Airlines and Ghanaian carrier Starbow. The entrance of new operators is expected to lower the cost of flights, which has been identified as a key barrier to Ivoirian tourism due to Air France’s monopoly on air travel during the conflict, which enabled the French carrier to set relatively high air ticket prices.

OUTLOOK: Considerable work remains to be done before Côte d’Ivoire can fully exploit its tourism potential, necessitating major investments from private and foreign actors. However, the country has the ability to develop several niches catering to high-value tourists while still preserving its cultural and ecological assets.