Ambitious new hotel projects promise to boost visitor numbers

Building on its reputation within the West African region as a politically stable and economically vibrant state, Ghana is working to develop its strong tourism industry. The country’s appeal as a destination is already clear to hundreds of thousands of visitors every year, as well as to Ghanaians themselves. From a solid base – tourism is already an important hard currency earner – Ghana now hopes to raise its profile as an increasingly popular destination. Leveraging its broad range of attractions and reputation as one of Africa’s safest and most welcoming destinations, the country now has a clear road map for increasing tourism arrivals, boosting revenues, and spreading the geographical and social impact of the sector’s growth.

Growing Numbers

The World Tourism and Travel Council (WTTC) forecasts that Ghana will see 1.19m international tourist arrivals in 2014, up from the 993,600 projected by the government for 2013. This trend has been moving strongly upwards in the past few years. In 2010, there were 746,500; in 2011, 821,200; and in 2012, 903,000. The sector generates much-needed hard currency and is attracting increasing investment from domestic and foreign companies.

The official Ghana Tourism Authority (GTA) has set a target of 5m arrivals by 2027, and 2m in the nearer term. It expects to draw on Ghana’s core markets such as the US, UK and Germany, as well as expanding tourism markets in the Middle East and Asia. Awareness of tourism’s economic importance is also growing: it is now among the country’s major sources of foreign currency earnings, behind only oil, cocoa and remittances. One of the country’s great competitive advantages is the unique mix of activities that are on offer within the country: cultural and historical heritage, natural landscapes and beaches, as well as a growing range of conference facilities with opportunities for meetings, incentives, conferences and exhibitions (MICE) tourists.

Economic Contribution

The travel and tourism sector contributed GHS2.62bn ($998.74m) to Ghana’s GDP in 2013, representing 3% of the total, according to the WTTC. This is just above the 2.9% global average, but below some regional competitors such as The Gambia (9%) and Senegal (5.3%). Kenya, considered a regional model for tourism development, generates 4.8% of its GDP from the sector.

Even so, the pace is picking up. In Ghana, the WTTC forecasts strong sector revenue growth of 9.7% in 2014 – the sixth highest rate in the world – and an average 4.5% annually between 2014 and 2024. However, the latter will be in line with broader economic growth, meaning that the WTTC expects the sector to account for the same 3% of GDP in a decade’s time.

If the government’s plans are implemented, the sector’s share may become larger. Long-term growth will be just over the global average of 4.2%, but under the African average of 4.9%. However, the sector naturally has a considerably larger share of the non-oil economy. Statistics from the WTTC use a broad definition of the sector to encompass domestic tourism for business and leisure, as well as the economic contribution of foreign visitors, excluding commuter trips.

The organisation estimates that the total contribution of travel and tourism to GDP was GHS6.24bn ($2.38bn) in 2013, or 7.2% of GDP. This is still somewhat under the global average of 9.5%, however, and Ghana ranks 119th in the world on this measure. The WTTC expects this sum to grow rapidly in 2014, by 9%, the eighth highest growth rate in the world, and average 4.4% annual growth over the coming decade. In comparison, Kenya currently generates 12.1% of its GDP in total from tourism and travel, and Senegal 11.6%.

The WTTC estimates that “visitor exports”, referring to the revenue generated by foreign tourists to Ghana, reached GHS2.09bn ($795.56m) in 2013, equivalent to 5.7% of total exports. It expects this figure to grow by 8% in 2014 but then to slow considerably to an annual average growth rate of 2.4% between 2014 and 2024. The sector attracted investment worth GHS787.6m ($300.23m) in 2013, a figure expect to grow by a modest 3% annually to 2024. Tourism thus accounted for 3.2% of total investment – slightly above its direct contribution to GDP.

Development Plan

In November 2012, the government published its National Tourism Development Plan (NTDP), covering the period from 2013 to 2027. This is a study of the sector’s current level of development followed by a highly detailed strategy for tourism growth over the following decade and a half, including roadmaps for development in a range of areas, and a number of targets. There is a very strong emphasis on private sector involvement, including through public-private partnerships (PPPs) for developing facilities, infrastructure, products and marketing.

The NTDP foresees visitor numbers rising to 1.09m in 2014, 1.2m in 2015, 1.32m in 2016 and 1.46m in 2017. It sets the medium-term goal of 2.45m visitors in 2022, with a target of 4.32m for 2027. In turn, the NTDP is aiming for revenues of $2.07bn from foreign tourists in 2014, rising to $2.28bn in 2015 and $2.51bn in 2016. Revenue targets then rise to $4.69bn for 2022 and $8.38bn for 2027. Taking into account other forecasts, this would see the forex contribution of tourism to GDP to rise to 5% in 2017 and 5.7% in 2027.

Phased Development

Beyond raw numerical targets, perhaps most interesting for a guide to where and how the government aims to encourage investment in tourism over the next decade and beyond are the NTDP’s sections on development phases and spatial and segment development. The NTDP foresees three phases in the 15 years it covers. The first, from 2013 to 2017, is consolidation. The aims are to build on Ghana’s tourism achievements to date, and to capitalise on the country’s reputation as a safe destination in particular. There is increasingly an especially strong emphasis on markets that possess “low demand elasticity” as well as those that have cultural, historical, professional or geographical reasons to travel to Ghana – and importantly, those already based in the country, whether citizens or short-term expatriates.

These groups include business travellers; the scientific, academic, volunteer, educational market; other Economic Community of West African States citizens; and Ghanaians. Domestic tourists currently account for the majority of tourism spending, at 55%, according to the WTTC. The majority of visitors to most major tourism sights are Ghanaians or expatriates based in the country, according to the GTA.

Phase two is to be “a period of rapid market and product growth”. Ghana will aim to maintain its position in its established market segments, while seeking to attract a broader range of visitors, some of whom currently only visit in relatively small numbers. The plan identifies backpackers, well-off tourists seeking a variety of cultural and natural attractions, and MICE tourists. The plan expects that tour operators will rapidly expand their portfolios in this period.

In the final phase, the emphasis will be on sustainability after the growth phase. According to the plan, Ghana will be a well-established leisure destination for a wide range of travellers, capitalising on its cultural, natural, heritage and lifestyle offerings, while remaining good value. But visitor numbers and product portfolios will continue to grow. The “spatial” development of tourism may follow a similar pattern. For the time being, the main focus is on consolidating attractions and infrastructure in the more-visited areas, but over time, development is expected to spread to more remote regions, particularly as increasing numbers of adventurous leisure tourists visit.

At the moment, most tourism development takes place in what has been called Ghana’s “golden triangle” of Accra-Kumasi-Cape Coast. Beyond the three cities themselves and their museums and sights, attractions in the area include Ghana’s most-visited national park at Kakum and beaches along the coast. Just beyond the triangle but accessible to it are more attractions, including Akosombo on Lake Volta, Shia Hills Resource Reserve (one of the easiest to access protected areas in the country) and Ramsar sites – wetland reserves ideal for bird and wildlife watching.

Elsewhere, many attractions receive only limited numbers of visitors due in large part to their inaccessibility. One which the NTDP highlights in particular is the Mole National Park in the Northern Region, which has huge potential, but can be hard to get to and offers only limited accommodation. It is places like Mole where public-private partnerships, pooling risk and sharing resources could become most valuable for the sector.

Priority Segments

The GTA highlights a number of areas with particular investment potential: cruises, including on Ghana’s lakes and inland waterways; beach resorts; and ecotourism. The latter is seen as particularly desirable, for bringing in tourist revenues while generating jobs in rural communities, and ensuring that the environment is preserved.

In addition to this, the NTDP cites city trips, free independent travel tourism (groups travelling with a vehicle and a guide, organised independently), MICE and outdoor activities as potential niches for development.

Ghana Tourism Authority

The GTA established the Ghana Tourist Board (GTB) following the passage of the Tourism Act in May 2011. The organisation has been in a state of transition ever since, with a view both to expanding its remit and power and improving its financial situation so that it can better support tourism development and regulate the sector, taking into account changes in the industry. The GTA is currently developing a “scheme of service”, restructuring its internal operations under a director-general and two deputy director-generals. “The GTA’s remit is to develop tourism in collaboration with the private sector to make Ghana a top tourism destination in Africa,” Sampson Donkoh, acting CEO of the GTA, told OBG. The GTB divided sectoral regulation into three main areas of business: accommodation and catering, tour operators, and car hire and charter flights.

Investor Engagement

The GTA includes representatives of the Ghana Tourism Federation, the trade organisation, and is very actively engaged with the private sector, both domestically and internationally. “We try to connect with investors so that they can come in with hotel chains, come in with tourism enterprise development, improve the sector structure, and indeed improve arrivals,” said Donkoh.

A range of incentives is available to investors in the tourism sector. They include a concessionary rate 10% duty on imports of all goods needed for tourism project development except food, building materials and vehicles; accelerated deprecation allowances of 20-50% on plant, buildings and equipment; and further tax allowances of 25-50% depending on the project and location. While much attention has focused on major international and domestic investments in the sector, particularly luxury and boutique hotels, small and medium-sized enterprises (SMEs) play a very important role in the sector – particularly in the overlooked domestic tourism market. Those on lower incomes, less affluent domestic travellers and backpackers use smaller one- and two-star hotels and guesthouses. In many parts of Ghana, for instance, SMEs have dominated the sector; the GTA is thus very keen to help support them through training and advice.

Models

As a sign of the continued importance that the government is placing on tourism, it operates an inter-ministerial committee bringing together ministers from all departments that affect the tourism sector. These include the ministers of transport, energy, local government and the interior.

As it looks to develop Ghana’s tourism industry over the longer term, the GTA is seeking models of best practice from around the continent: Egypt, Morocco, Tunisia, Kenya, Mauritius and Namibia are just some of the case studies that the organisation has examined. The GTA is also well aware of its more proximate regional competitors: these include countries such as The Gambia and Senegal, the main destinations in West Africa, but also other countries which currently lag behind Ghana to an extent, such as Nigeria.

While it is hardly a high-profile leisure tourism destination, there have been regional successes, such as the Boki Rainforest, where jungle canopy walkways have proved popular with visitors. “We compete with our African counterparts, but also have links with them and learn from them – which in turn makes us a more effective competitor,” said Donkoh.

Tourism Development

A notable area in which the GTA differs from the GTB is its access to the newly established Tourism Development Fund (TDF), which is also under development in 2014. The 2011 Tourism Act enacted a 1% levy, which hotels and catering outlets charge on services, and which has been used to finance the TDF. The levy was first introduced in October 2012 in some establishments. It is in the process of being rolled out nationwide. The TDF is intended to support development in six major areas of the sector namely, private enterprises, marketing and promotion, research and statistics, infrastructure development, product development, and training and education.

Some of the TDF will be channelled into developing attractions. The GTA suggests that a site in each state will be selected for development, based on the state’s tourism theme. The idea is to boost tourism in the regions, improve each state’s individual tourism branding, and of course ensure that the country’s premier attractions are enhanced. New tourism legislation also makes provisions for district tourism offices.

“Regional and local governments are major stakeholders: we can’t develop tourism without them,” said Donkoh. “This will enable us to get closer to the communities where the attractions are, to help provide technical expertise and to seek funding for the development of attractions in these communities.”

It is widely agreed that many of Ghana’s tourism attractions are poorly maintained – an issue that the GTA acknowledges – and that improving their accessibility, state of repair, cleanliness and the information available on site should be a priority. However, the fund alone will be unable to provide the substantial investments that Ghana needs to improve on its tourism infrastructure and services to become a first-rate destination. The authorities are actively seeking investors not only to develop hotels and resorts, but to improve tourism sights and the facilities around them.

Marketing And Promotion

Product development will go hand in hand with the strengthening of marketing and promotion. “A lack of branding and marketing on international markets is one of the biggest challenges,” Evelyn Nikabs, CEO of Cedi Travels and Hospitality Services, told OBG. The NTDP acknowledges this problem, noting that Ghana is currently dependent on business and volunteer tourism, and that Ghana has a “weak brand identity” that is fragmented and inconsistently applied by public and private sector actors. This is partly an issue of lack of financial and human resources, deficits the TDF should help address.

The plan sets out the aim of developing a clear, consistent brand, linked to product development. Marketing will be targeted at specific markets, emphasising particular products as appropriate, featuring a PPP – after all, it is tour operators who eventually sell their products to the end consumer and deliver the services. “In any country it is important to understand what a good tourism product is and then to mobilise resources to develop products to a standard where a tourism operator has something to package,” Adrian Landry, general manager of Accra’s Labadi Beach Hotel, told OBG.

In marketing and promotion development, the GTA will examine both established markets and those which it sees as having particular potential, especially in the Middle East and South-east Asia. While the authority does not currently have offices abroad, it will look to establish them, starting with core markets. Further to this, Ghana will continue to pitch for the middle and upper end of the market, focusing on attracting visitors interested in cultural, natural and historical attractions rather than pursuing the mass market for sun, sea and sand. This plays to Ghana’s strengths, targets growing niches and focuses on segments with higher margins. “The message will be simple, based on culture and warmth,” Donkoh told OBG. “We have a mix of tourism products – authentic culture, natural heritage, heritage including castles and colonial sites, a variety of landscapes and 25 ecotourism sites – with an ongoing process of development.”

Markets

In 2005 and 2006, Ghanaian tourism officials attending international travel fairs identified the Middle East and Africa as a potential growth market for their country, leveraging its accessibility via Egypt Air’s direct flights. Since then Egypt Air’s development of a hub-and-spoke network across the region has only strengthened this logic. Egypt Air currently flies to Accra four times a week, and Donkoh believe this will increase as demand rises – the challenge for the GTA will be taking Ghana’s tourism message to the Middle East, where it currently has little exposure.

With Asian markets, the GTA feels that Ghana can take advantage of the growing importance of trade and investment ties with China, as well as India (there has been a South Asian community in Ghana for decades) and rising economic powers such as Malaysia. Here, connectivity with Asia through airlines such as Emirates and Kenya Airways is particularly important.

Connectivity

Connectivity is a much-discussed issue in the sector, as Ghana currently does not have a national airline. In many countries, the national carrier can play a central role in tourism promotion, as well as bringing the obvious benefit of direct connectivity.

Donkoh says that the biggest benefit that a new flag carrier could bring would be increasing competition, helping put downward pressure on prices and making Ghana a more affordable place to reach; high ticket costs currently put many off. “It’s a big challenge to meeting our targets,” he told OBG. Loss-making state-owned Ghana International Airlines, suspended its operations in 2010 after less than five years. But at the time of research, the government was preparing to launch a PPP tender for a partner to take a majority stake in a new national carrier. Donkoh is hopeful that there will be some concrete progress from discussions by the end of the year. He is also upbeat about a proposal by South African Airlines, announced in mid-2014, to establish a regional hub in Accra that would provide better connections across West Africa.

Business

Business tourism is a substantial part of the sector, accounting for 37.2% of revenue, according to the WTTC. The proportion is probably higher for foreign tourism alone. Across the world, business visitors tend to spend considerably more per day than leisure tourists, and make up a significant part of the clientele for top-end hotels. Over the past decade, the discovery of oil off Ghana’s coast and the development of the oil industry (commercial extraction started in 2010), and the economic boom that it helped trigger, has drawn investors and businesspeople from around the world. This has in turn boosted the tourism sector, as many of the new hotels are aimed at the business market (see analysis).

The NTDP highlights MICE tourism as a niche with potential, and Ghana already has a small but significant MICE sector. While it hosted the UN Conference on Trade and Development (UNCTAD) XIII in 2008, mostly it is a focus for regional and sector-based events and meetings, particularly for the hydrocarbons industry, UN agencies and individual companies holding off-site meetings. For a period between 2011 and 2013, Ghana attracted events run by Nigerian companies in particular, including incentives breaks, though the market has slowed, particularly due to competition from The Gambia, Nikabs told OBG.

The Accra International Conference Centre (AICC), run by the Ministry of Foreign Affairs, can accommodate around 1600 people in the main auditorium and has two committee halls with a capacity of 200 people each, as well as some large meeting rooms. Moreover, many new business hotels have events facilities.

However, as the NTDP acknowledges, MICE tourism is poorly promoted and facilities at the AICC have not been upgraded for two decades. “There are no modern facilities to compare to those of Kenya, for example,” said Nikabs. Upgrading and expanding conference facilities will probably be necessary to attract more MICE business; more direct flights into Accra would also help. The country can leverage its natural tourism advantages to boost the MICE segment, particularly its stability and security. The accessibility of places of natural beauty for recreation is also an advantage – business travellers can enjoy beaches, lakes and forests either as a part of an incentives package or as part of a getaway after a conference.

Human Resources

Tourism and travel directly employed 124,500 people in Ghana in 2013, according to the WTTC, which expects sector employment to rise by 7.4% in 2014 and 2.4% annually to 2024. Overall, it estimates that 311,000 jobs rely on tourism directly and indirectly, 5.8% of total employment.

Sector leaders regularly say that a shortage of skilled, trained labour is one of the biggest challenges that they face. The GTA acknowledges that patchy service standards are an issue for the sector; good management and training, rather than willingness and friendliness, are lacking. Demand for trained tourism workers will only grow as the sector expands. The sector is seen as a driver for job creation – and by some measures will become the single largest employer by 2015, with 50,000 new jobs created directly since 2011, and a “substantial number” indirectly, according to the High Impact Tourism Training (HITT) Programme run by the Netherlands Development Organisation and funded by the European Commission.

The organisation said that 10,500 receptionists, housekeeping and restaurant staff alone would be needed between 2011 and 2015, requiring thousands to be trained every year. Accordingly, the HITT has a €2.5m, four-year focus on training informal sector workers, the unskilled, the young and women in particular. The programme also offers support to businesspeople who are trying to launch start-ups. Some entrepreneurs looking to develop tourism businesses could also do with support. In some cases, enthusiasm and a willingness to invest are not always matched with good market analysis and planning, leading to business failures (particularly empty hotels).

Useful as programmes like HITT are, Ghana will need to do more to develop its tourist sector skills base. The GTA sees tourism education as a potential area for private investment – private vocational teaching already being a big business in the country.

Outlook

Ghana has become one of Africa’s most popular tourist destinations. The challenge now will be to ensure the continued growth of tourism through appropriate investments in infrastructure, amenities and attractions, while revamping and substantially boosting the sector’s promotional and marketing efforts abroad. The ebola outbreak in Liberia, Guinea and Sierra Leone has led to a stigmatisation of all African nations, creating an additional hurtle to growth. The NTDP thus provides a roadmap for the future of tourism in Ghana, although parts of the strategy will have to be adapted as the sector continues to respond to market conditions. The country has its sights on segments in which it has competitive advantages and is building its reputation globally. While implementing the plan will require political will, it will also help attract private investors seeking out opportunities within the sector.