Eyewitness News

IMF DELEGATION MEETS THE TRADE VIA THE SHTA
By Christopher Gill

The following blog is from “meeting notes” of Christopher Gill in a meeting of SHTA with the IMF on May 7, 2010. The views are not of SHTA, nor is the blog an official document. The document is written and loaded as a blog in the interest of educating the Public and making them aware of IMF’s role in Seychelles and to stimulate public debate on all the issues raised. Any opinion is welcomed.

The IMF delegation to Seychelles met on Friday with the Tourism Trade Industry for a debriefing on progress of the IMF recommended reforms underway in Seychelles. The program is to last for Three (3) years.The delegation representing the IMF was led by Mr. Jean Le Dem, Division Chief of the African Department , with support of Madam Nkunde Mwase , Economist, Strategy, Policy and Review Department, and Mr. Nikoloze Gigineishvili, Economist.

Representing the Seychelles Hospitality and Tourism Association (SHTA) were Jennifer Sinon, CEO, Daniela Payet-Alis, Executive Secretary, and Christopher Gill, Executive Committee member and Chairman of Ecology and Public Safety Subcommittee, and Mr. Paul Hodoul, representing the Seychelles Car Hire Association.

Madam Daniela Payet-Alis stressed that the Tourism Industry did its utmost in 2009, to fight the retrenchment of Visitor Arrivals in light of the ongoing global economic downturn and recession in Europe, our main market. The final numbers at the end of the yearwere -1%. However, the total receivables for the year was down -20%. This was stressed to be a result of heavy discounting from the trade, and visitor’s now being noticeably conscious of prices, seeking out value for money bargains. Seychelles has traditionally been an upmarket destination, marketed as an Haut De Gamme destination.

Outlook for 2010 and 2011 was perceived to be more serious and worse than 2009, with an estimated -5% in Visitor Arrivals and a greater reduction in total revenue to the Industry, exceeding -20% of last year.

Mr.Paul Hodoul stressed that the car hires in Seychelles, have had to reduce rental fees by 20% or more. Cars that rented for euro 50.00 in the past, is now renting for euro 30.00. There is a remarkable reduction in revenue for the trade. Additional fall of the Euro against the US Dollar, has added additional calamity to the Industry in the first quarter of 2010. Similar discounting is expected in the second quarter of 2010.

Mr. Christopher Gill said the projected reduction in volume of -5% or -10% in 2010 is a result of lack of proper coordination between Air Seychelles, and STB, Marketing in part. For example, the UK market was launched last year, and at the same time, Air Seychelles, had signed agreements to pre sell 60% of seats from London, to an agent selling seats to Mauritius on Air Seychelles.
Hence visitors wanting a direct flight from UK to Seychelles, cannot get seats. Unless this is rectified, we will continue to see a downward trend from the UK market, a market that was re-launched in 2009, Alain Strange of the STB.

In the case of the South Africa market, the Tourism Trade has said that Eden Island, bound visitors take up seating on Air Seychelles, and travel agents are having trouble getting seating on Air Seychelles. No other carrier flies from South Africa to Seychelles. If we need more Tourists, we will need more flights. Either Air Seychelles provide additional flights, or allow another company to provide additional flights. This will ensure increase in volume of Arrivals and Revenue, Mr. Gill said.

He continued that, in the case of Eden Island, we have an initial project conceptualized around the retirement home community concept, that has now sought a change of use for the time share apartments, and they now compete directly with the Tourism Infrastructure of the Seychelles.

Mr. Gill said, a hotel was approved for Eden Island, but it has not been built yet. Most of these Eden Island room nights, are likely banked overseas, and Government of Seychelles will not see that revenue. Hence, this will result in lower revenue volume for Seychelles in 2010. This is no small matter for Seychelles. It is a major issue buried to help Eden Island survive the downturn. It is Seychelles Lehman Brothers, if you will.

Mr. Gill stressed that many hotels are not focusing on making a profit in 2010, but they are focused on cutting losses. He said: “they are minimizing losses this year, instead of working to maximize profits”. That sums up the Seychelles business climate in 2010

Mr. Nicoloz Gigineishvili stressed that it appears to be a very difficult year, 2010.

Mr. Gill added that the years will get more difficult for the trade. If Eden Island is allowed to convert all its units to visitor beds, it will be the destruction of the Industry infrastructure as we know it. Rates at Eden Island vary from Euro 50.00-150.00 per night. These rates will cause havoc in the Industry faced with high end overheads and operating costs. It will result in less revenue for the Revenue Commission of Seychelles as well. It is estimated that 220 units are complete or near complete. That represents 500 visitor beds at least. Once the project is completed with 660 units, we will have an estimated 1,300 beds or more. The rates in Seychelles for Three (3) star will drop to Euro 30.00 per night. Four star rates will go to Euro 40.00 –Euro 60.00 per night if this train is not derailed fast.

Unfortunately, the Government of Seychelles cannot seem to control the revenue from these apartment hotels. This will result in overall less revenue volume for the Government, and the Country will sink further into the abyss. Hence 2010 and 2011 according to Gill, unless there is a change in Government policy concerning Eden Island, will result in less revenue volume for Seychelles.

Mr. Gill asked Mr. Dem, under what conditions will  IMF review the Country program of Seychelles, in light of prevailing bad governance and corrupt practice ongoing that are not brought to justice by the current administration?

Mr. Dem replied, IMF is making a conditional (recommendations) meaningful review of the Marco economic program of the Seychelles, taking in light, better governance practice, and improvements in procurement process. IMF does not investigate a country under administration. If there is a huge amount of corruption, or a systematic pattern of corruption, that undermines the macroeconomic foundations of the reform, then IMF will look into such cases.

Mr. Gill asked, if the Khalifa case, of over 1000 containers tax free entering the country, the import of 20 BMW x 5 series for Scr 25.00 each, the systematic granting of concessions in projects Sheik Khalifa has interests, selling off of over 66 acres of Government land to one person over a number of years, importation of over 2000 workers free of GOP’s, hundreds beyond permits or knowledge of the government, use of an illegal, unlicensed Class One building contractor without any governmental sanctions, amounts to a systematic pattern of corruption ongoing that would affect the Marco economic stability of Seychelles, given that it is a micro state?

Mr. Dem: Well, put it that way, it is beginning to look like a pattern, but we will need to verify the information, to determine if it is a systematic pattern.

END
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