FILE Copy Report No. 1147b-IVC Ivory Coast: A Basic Economic Report Annex 3: The Tourism Sector February 1977 Western Africa Region FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its cbntents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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FILE CopyReport No. 1147b-IVC
Ivory Coast: A Basic Economic ReportAnnex 3: The Tourism SectorFebruary 1977
Western Africa Region
FOR OFFICIAL USE ONLY
Document of the World Bank
This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its cbntents may nototherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
Currency Unit: CFA Franc (CFAF)
A fixed parity exists between the CFA franc and the French franc:FF 1 = CFAF 50
The CFA franc floats against the dollar. Between February 12,1973 and the end of 1976, the rate has fluctuated as follows:
US$1 = CFAF 205-255
Throughout this report the following rates have been used forthe conversion of CFA francs into US dollars and vice versa:
1 Metric Ton (t) = 2,205 lbs.1 Kilogram (kg) = 2.2 lbs.1 Kilometer (km) = 0.62 mile1 Meter (m) = 3.28 feet
FISCAL YEAR OF THE GOVERNMENT
January 1 - December 31
This report comprises: a separate volume of Summary and Conclusions,a Main Report, and separate annexes on Agriculture, Industry, Tourism,Transportation, Urban Development and Education.
FOR OFFICIAL USE ONLY
ANNEX 3: THE TOURISM SECTOR
TABLE OF CONTENTS
Page
LIsr (JF ABBREVIATIONS ................................... i
CIIAPTER 1: PAST Dl.VELOPMENTS IN THE TOURISM SECTOR .... ............. 1
A. Introduction .IB. Tourism Demand. 2C. Some Factors on the Supply Side. 3
llotel Accommodations. 3Room Rates. 3Transportation. 4Direct Impact of Tourism on the Economy. 5The Covernment's Role in the Tourism Sector. 7
A. Projections ............................................. 10B. Policies ................................................ 12
CHAPTER 3: CONCLUSIONS AND RECoMMEINDATIONS ......................... 15
A. General .15B. The Mi.nistry of Tourism .15
The Promotion Department .15Hotel Training Programs .16The Training and Organization of Artisans .16lHotel Classification .16Tourisin Informnation Office .16Budget .16
Appendix Table 2: Construction Cost of Principal Hotels 1970-75Appendix Table 3: Comparison of Round-Trip Air FaresAppendix Table 4: Operating Costs in the Hotel Sector (1973) and Percentage
of Total RevenuesAppendix Table 5: Ministry of Tourism - Organization ChartAppendix Table 6: Invustmeints and SubsidiesAppendix Table 7: GoverLument Projections of Hotel Arrivals and Room-Night
DemanldAppendix Table 8: Mission Projections of Hotel Arrivals and Room-Night Demand
Appendix Table 9: Mission Projections of Demand for Hotel Accommodations
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
LIST OF ABBREVIATIONS
CIDA Canadiani International Developmcnt Agency
GOP Gross Operating Profits
IGTA The Ivory Coast Travel Agency
ONAA The National Handicrafts Office
RAN Regie des Chemins de Fer Abidjan-Niger
SIETHiO Societe Ivoirienne d'Expansion Touristique et Hoteliere
UTA llnion des Transports Aeriens
CHAPTER 1: IAST DEVELOPMENTS IN THE TOURISM! SECTOP
A. Introduction
1.U1 Tihe tourism sector in thie Ivory Coast is still somall, but has grownrapidly since 1970, the first year for wlich statistics were kept. AmbitiousPlan targets set for 1971-75 were substantially reached with, in 1974, closeto 90,000 international arrivals and 556,000 guest nights in the hotel industry.This development is encouraging..
1.(2 ihe direct contribution of tourism to the economy of the Ivory Coastis still smalL. The hotel industry's direct contribution to Cl)P is about onehalf of one percent; net foreign exchange earnings are estimated at only 40 per-cent of gross exchange earnings, while about 3,100 people or 1 percent of theIvorian work force in the modern sector are directly emaployed in the lhotelindustry. Altlhough the impact on tlhe total economy is small and will remainso for a considerable time, the (;overnment is rightly arguing that it is awelcome diversification to the economy.
1.03 Breaking down thie foreign hotel arrivals into business visitors, con-ventioneets and vacationers, about 75 percent of the arrivals fall into thefirst two categories. The recent opening of two beach villages may wellchange thiLs proportion to the advantage of leisure tourism soon. The Govern-ment is optirmiistic about thte future development nf tourism, particularly ofthe latter variety, expecting some 230,000 vacationers by 1985. In the viewof the mission, the estimate is too optimistic as in general the potential forleisure tourism in the Ivory Coast is evaluated as only moderate. A marketstudy is going on to find out whether a change in leisure tourism policy wouldbe feasible. The country has assets that could be developed. For example,historic areas near Abidjani, tribal culture and folklore, handicrafts particu-larly in tihc Nortlh of the country, and the tropical flora and fauna have notyet beeni exploited to any great extent. The beaches lhave limited potentialdue to dangerous ocean currents in raany places, but Abidjan itself, withi allit has to offer in terms of hligh-quiality facilities, services and entertain-ment, could be a formidahle asset and could develop into a "must" in WestAfricatn package tours. The study will hopefUlly indicate which points futurepolicies should emrphasize.
1.04 The Ministry of Tourism, created in 1971, has assumed the functionsof several former agencies and supervises tliree semi-public organizations, theSociete Ivoirienne d'Expansion Touristiqule et lioteliere (SIETIIO), the IvoryCoast Travel Agency (ICTA) and the National llandicrafts Office (OtNAA). TheHlinistry of Tourism shares with the Ministries of Planning and Finance thetask of establishing policies and objectives for time sector and administeringthe incentive system. By the end of 1975 abouL CFAF 28 billion will have beeninvested in infrastructure and building in time sector since independence in1960, roughly 60 percent financed by the Government and 20 percent each fi-nanced by private Ivorians and foreigners. In addition, by the end of 1975
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thc Government's accumulated operating expenditures for the Ministry ofTourism and the three semi-public companies it supervises will have amountedto about CFAF 2.5 billion.
1.05 With major infrastructure in place, the Government decided in .1973to reduce its direct involvement in the sector and to attract private promotersfor hotel construction. Secondary infrastructure (access roads, public utili-ties) would still be financed by the Government, for which the users generallywould be charged. To further encourage private investment, a Tourism IncentiveCode was introduced in 1973. In terms of tourism policy these decisions appearto be sound and will lead to reduced demand for. scarce public resources forthis sector.
1.06 This annex will focus on recent developments in the tourism sectorand will discuss and evaluate Government sector policies, review its tourismforecasts and analyze the investment required. Finally, it derives conclusionsfrom the recorded findings and formulates recommendations as to the futureinvestment program and policy for the sector.
B. Tourism Demand
1.07 In 1974, out of the Ivory Coast's 86,000 registered internationalarrivals, about 77,000 sought accommodation in hotels. The rest, mostlyFrench nationals, stayed with friends and relatives. The 23 percent annualincrease in guest-nights between 1970 and 1974 included an estimated 170,000guest-nights for Ivorian and expatriate residents travelling within the countryon business, vacation or for any other purpose.
1.08 About 58,000 or 75 percent of international arrivals seeking hotelaccommodation in 1974 were businessmen, who stayed primarily in Abidjan.Business travel to the Ivory Coast has increased rapidly reflecting the coun-try's economic growth and the fact that Abidjan has become the commercialcapital of francophone West Africa. The average length of stay has risen from4.3 nights in 1970 to about 5 in 1975. Expenditures per business visitor, in-cluding hotel accommodations, food, local transportation and miscellaneousitems, averaged about CFAF 13-15,000 per day (US$60). About 1,700 conven-tioneers spent an average of seven days in the country. Abidjan's modernfacilities expanded in 1974 with the opening of the Hotel Ivoire ConventionHall which can accommodate up to 4,000 people. The convention market, thoughcompetitive, has potential in the Ivory Coast.
1.09 The balance of hotel arrivals,or about 19,000,can be consideredvacation tourists. Half of them visited the two beach resorts near Abidjanfor an average stay of 6.5 nights, mostly during the peak season from Octoberthrough April that coincides with the European winter. The other half parti-cipated in West African circuit tours stopping for 2 or 3 days in the IvoryCoast. About 2,000 of the leisure travelers visited the interior of thecountry for 1 or 2 days. Daily expenditures of vacationers averaged aboutCFAF 8,000 (US$35).
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1.10 Most foreign arrivals are French nationals (47 percent), followedby Africans (12 percent), Americans (9 percent), Germans (7 percent), Italians(5 percent) and other nationalities (20 percent). Of the French visiting theIvory Coast, the majority are on business, whereas most of the Americans,Germans and Italians are leisure tourists. The non-beach tourist traffic isfairly even throughout the year, except for a low period from June throughAugust.
C. Some Factors on the Supply Side
Hotel Accommodations
1.11 Hotel capacity has grown rapidly and, with the number of rooms morethan doubling since 1970, amounted to some 3,800 rooms at the end of 1974.Roughly half of these are of luxury and international standard--about 1,450 inAbidjan and 490 in the interior of the country. Of the remainder, about 550rooms are in the two seashore vacation villages east of Abidjan. The balanceconsists of economy-type accommodations. Most of the hotels of internationalstandard in Abidjan are run by international hotel management companies (Ap-pendix Table 1).
1.12 Despite the rapid expansion of accommodations, 1974 room occupancyrates in Abidjan for high standard hotels still averaged 85 percent, with anestimated turnaway of between 5 and 10 percent. Room occupancies in theinterior of the country are not well known and vary considerably. On averageit may be substantially below 50 percent. Several of these hotels are ownedand managed by the Government, which is losing money on them. The number ofarrivals in the two beach resorts which opened in 1972 and 1973 has increasedwith each season; the one managed by the Club Mediterranee had an 85 percentoccupancy rate during a seven-month season (October through April in 1974/75),and the Hotel les Palutuviers, managed by SIETHO, was occupied at a rate of55 percent during a ten-month season from August through May 1974/75. Roomdouble occupancy in city hotels and the interior of the country was about 20percent and it was 80 percent in the two beach villages.
Room Rates
1.13 Room rates in the Ivory Coast are high but not out of line withthose in other countries for comparable comfort; they range between US$30 andUS$40 for luxury rooms, between US$15 and US$25 in three- and four-star cityhotels, and between US$15 and US$20 in hotels in the interior. Operatingcosts are high since a great deal of food, beverages, supplies and fuel forenergy is imported. In addition, payrolls have been increasing rapidly fol-lowing inflation-compensating wage increases. On balance, the mission esti-mates that well-conceived hotel projects should be able to achieve acceptableprofit levels with gross operating profits (GOP) of 15-25 percent of sales andwith break-even room occupancy of about 60 percent (Appendix Table 4).
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1.14 Hotel construction costs are high (See Appendix Table 2). Depend-ing on the purpose, style, size and category of a hotel, they have variedconsiderably. Hotels built between 1970 and 1973 averaged about CFAF 5.5 mil-lion (US$24,000) per room. The cost of a four-star hotel in Abidjan completedin 1976 was estimated at CFAF 6.5 million (US$28,000) per room. The per-roomcost of a hotel in Bouake, built in 1975 and managed by the Regie des Cheminsde Fer Abidjan-Niger (RAN) amounted to CFAF 9.2 million (US$40,000). The costper hotel room in general is not only high because the import component ofconstruction is high--materials and expatriates--but also because qualitystandards are high. This is consistent with the high proportion of businesstraffic and the policy of attracting an elite group rather than mass tourism.The outstanding example is the Hotel Ivoire in Abidjan in whose financing theGovernment is heavily involved. The 700-room hotel, managed by the Intercon-tinental chain, was built in three phases over an eight-year period at aper-room cost of CFAF 14.3 million ($60,000) in current terms. The hotelcomprises a swimming pool, an artificial lake, a convention hall, a casino,an ice-skating rink, a cinema, several restaurants and other facilities forentertainment. The project obviously goes far beyond providing shelter tothe tired traveler, as it was intended to play a role in image-building and toprovide Abidjan with a tourism infrastructure next to none in West Africa.With the Government now leaving the initiative much more to private interests,more modest standards may prevail.
Transportation
1.15 Air transport provides the best access to the Ivory Coast, AirAfrique, the multi-national West African states' airline, headquartered inAbidjan, serves the country, along with another 15 international air carriers.Abidjan's international airport is well equipped to handle all modern commer-cial aircraft. Yamoussoukro, the home town of the President some 220 km north-west of Abidjan, also has an airport capable of handling international flights.Another eight regional airports are served regularly by Air Ivoire, the coun-try's domestic airline.
1.16 Air fares to and from the Ivory Coast are high compared to those ofother tourist destinations open to the country's main market, Europe (AppendixTable 3). The Government's policy with regard to airlines has focussed onregularly scheduled carriers rather than on charter operations. Air Afriqueand the French carrier UTA have a virtual monopoly on the market, controllingover 80 percent of it. Promotional fares, such as those negotiated by theClub Mediterranee, can be arranged. However, due to the monopoly situationcharters are only allowed on a case-by-case basis, and the demand for thistype of service will not increase until it is offered regularly. The presentpolicy obviously has an adverse impact on the country's tourism development.
1.17 Most tourist travel in the interior is done by air, although theroad network is rather well-developed. With the recent introduction of com-fortable, air-conditioned first-class sleeping cars, the railway has also
started promoting its services for tourist transportation. A trip from Abidjanto Ouagadougou takes 26 hours by train and is an interesting, colorful expe-rience. Tariff-wise, this mode of transportation compares well with airtravel; a one-way trip from Abidjan to Ouagadougou, including sleeping com-partment, costs about CFAF 11,000, compared with about CFAF 28,000 by air.A well-developed organization, however, to encourage tourists to go outsideAbidjan does not exist yet, and the costs of domestic tours are in generalfelt to be high. Typically, a three-day tour taken by a group of at least10 people to the western region of Man (600 km west of Abidjan), includingair transportation, two nights at a nearby motel and three meals a day, costsCFAF 40,000 per person. This does not include the cost of local sightseeingand excursions. The price of a one-day sightseeing tour by bus to the ancientcapitals of Bingerville and Grand Bassam, both in the vicinity of Abidjan, isCFAF 7,000 per person, excluding meals. At these rates, plus the generallyhigh cost of food and accommodations, it is not surprising that the averagetourist is reluctant to explore the country's otherwise considerable attrac-tions.
Direct Impact of Tourism on the Economy
1.18 Total revenue figures for the hotel industry used in this report arethose declared in 1973 for fiscal purposes and may understate real revenue.Most of the hotels in the luxury and international standard categories (3 to5 stars) show good gross operating profits. Since smaller hotels often lackreliable accounting systems, their revenue figures are based to a large extenton estimates. In 1973, the hotel industry declared total revenues of CFAF 5.7billion. Hotels of international standard (half of all rooms) account forabout 72 percent of these revenues. However, operating costs amounted toabout CFAF 4.8 billion, or more than 80 percent of total revenues. The largeimport components of food, replacement of material and equipment, and highsalaries, especially those of expatriate staff, are the major causes of thehigh operating expenses that particularly affect hotels catering to an inter-national clientele. Gross operating profits for individual hotels range fromabout 35 percent to close to zero for SIETHO-owned hotels and to a loss forsome of the vacation villages (Appendix Table 4).
1.19 The hotel sector's direct contribution to GDP in 1973 amounted to
CFAF 2.3 billion at market prices and to CFAF 1.9 billion at factor cost.This represents about 0.5 percent of the nation's GDP. Although the hotelindustry was expanding rapidly in the first-half of the 1970's, its contribu-
tion to income remains small.
1.20 The hotel industry employs about 3,100 people, or roughly 1 percentof the Ivorian labor force in the modern sector. Of these, about 62 percentare Ivorians, which is roughly the same proportion as found in industry ingeneral. About 30 percent are Africans from neighboring countries. Non-
African foreign wage-earners account for 8 percent, whereas they make up only4 percent in industry. In the process of Ivorianization, however, jobspreviously held by expatriates are gradually being taken over by Ivorians.
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For example, the Hotel Ivoire employed 28 expatriates in mid-1975 out of 800employees (3.5 percent), which is about half of what it was a year earlier.The largest component of non-African foreigners are employed by the recently-started resort villages; these workers occupied 20 percent of a total of 572jobs, a percentage that should come down considerably after operations get fullyunderway. The payroll of the different groups of workers is not proportionateto their numbers in the work force. Ivorians earn about 45 percent, otherAfricans 23 percent, and non-Africans 32 percent of total wages paid by thehotel industry. Average monthly wages range between CFAF 17,000 and CFAF31,000 for Ivorians and other Africans, and between CFAF 200,000 and CFAF300,000 (1974) - excluding top management positions - for non-Africans. The3,100 jobs for 3,800 rooms give an average of about 0.8 employee per room.Obviously, luxury hotels and hotels of international standard are slightlyabove average with 1.2 and 1.0 employees per room respectively. Overall, how-ever, the ratio is at par with that of hotels in Europe and sub-Sahara Africa,but only about half that of East Africa. It is estimated that at least another3,000 jobs can be linked indirectly to the hotel sector. They include peopleworking in shops, laundries and restaurants or carving and trading handicrafts,but not those temporarily employed in the construction of hotels.
1.21 It is often claimed that tourism is a relatively labor-intensiveindustry. This is not clearly the case in the Ivory Coast. Although a com-parison of investments required per job in manufacturing and in hotels is noteasy, averages of CFAF 5 million for the latter compared to about CFAF 2.5 mil-lion for manufacturing have been calculated for 1973. 1/ Although there isa margin of uncertainty in these calculations, given the fact that Ivorianmanufacturing on the average is considered to be capital intensive, thetourism industry in the Ivory Coast is certainly so. This should not be asurprise given the character of the industry (high standards for business andelite tourists).
1.22 The breakdown of tourist spending can vary widely depending on thetype of visitor and the purpose and length of stay. In 1974, on the average,a visitor spent about CFAF 10,000 per day: 34 percent on lodging, 18 percenton food consumed in the hotel, 17 percent on food consumed outside the hotel,15 percent on purchases made outside the hotel, 9 percent on inland trans-portation and 7 percent on entertainment, including sight-seeing excursions.In terms of gross foreign exchange earnings, tourism contributed some CFAF 4.5billion. Net foreign exchange earnings are estimated at 40 percent, which islow, reflecting the high import component of providing tourism services inthe Ivory Coast. Net earnings for 1974 are estimated at CFAF 1.8 billion, or0.5 percent of foreign exchange earnings from goods and non-factor services.
1/ More recent data show higher amounts for both sectors, but the proportionshave not changed.
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The Government's Role in the Tourism Sector
1.23 In 1961, the Government created the Societe des Hotels Ivoiriens,which was reorganized in 1968 and since has been known as the SocieteIvoirienne d'Expansion Touristique et Hoteliere (SIETHO). The primary roleof this organization has been to promote tourism in the Ivory Coast. It alsomanages Government-owned hotels, and the Government frequently has turned overownership of its hotels to SIETHO. SIETHO currently owns six such hotels,most of them located in the interior of the country, and manages a total ofeleven. The establishment of SIETHO was followed in 1963 by the creation ofthe Ivory Coast Travel Agency (ICTA), which was also placed in charge oftourism promotion. While at first their activities overlapped somewhat, ICTAtoday is concentrating mainly on promoting travel from abroad, while SIETHO'sprimary role is in the lodging field.
1.24 To coordinate and enhance tourism activities, the Ministere d'Etatcharge du Tourisme (Ministry of Tourism) was formed in 1971. Its major func-tions are (i) identifying zones for tourism development and planning proposalsfor implementation; (ii) marketing and promoting Ivory Coast tourism; (iii)regulating and controlling the tourism sector in general and the hotel indus-try in particular; and (iv) coordinating public and private activities intourism. These responsibilities are dealt with by four departments (AppendixTable 5). The Ministry also supervises SIETHO and ICTA, as well as theOffice National d'Artisanat et d'Art (ONAA). A low operating budget (aboutCFAF 410 million in 1974) and insufficient staffing have handicapped theMinistry's effectiveness.
1.25 From 1960 through 1975 the Government invested CFAF 17.2 billion incurrent terms, including CFAF 1.6 billion for infrastructure, in the sector.This represents about 63 percent of a total of CFAF 27.5 billion accumulatedinvested in tourism. Private Ivorians and foreigners hold 18 percent and 19percent respectively. In addition to direct investments, the Government'soperating expenditures for the Ministry of Tourism, including the three publiccompanies it supervises (SIETHO, ICTA and ONAA), will amount to about CFAF 2.5billion in current prices by the end of 1975; at* that time the subsidies willhave reached a level of about CFAF 600 million per year (Appendix Table 6).
1.26 In 1973, with major infrastructure in place, the Government decidedto leave hotel construction in principle to private initiative. This seems ahealthy change in policy. Substantial private participation in equity hasalready been identified for new projects. Short- and medium-term loans areunlikely to pose a problem, especially in light of the new Central Bank regula-tions which allow it greater flexibility in directing credit to prioritysectors. As long-term capital appeared to be a constraint to successfullyimplementing the Government's change in policy, the World Bank made a $9.7-million loan via a 75 percent Government-owned development bank for long-termfinancing (up to 20 years) for hotel construction. A small part of the loanwill be used to finance a marketing study and technical assistance.
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1.27 As part of its new policy, the Government introduced a TourismIncentive Code, comparable to, but somewhat less advantageous than the Invest-ment Code for Industry that was established in 1959. To become eligible forincentive benefits under this law, a potential investor's application has togo through different stages of approval. First, it must be cleared by theMinistry of Tourism (Agrement Professionel) which analyzes the site and thetechnical aspects of the project and ensures that all licenses and permitsare in order. The application is then submitted to the Ministry of Planningfor incentive benefits (Agrement Prioritaire), where it is subject to therecommendations of a special committee representing the Ministries of Tourism,Finance and Planning. The committee evaluates the investor, proposed manage-ment and staffing, marketing strategy, and the financial and economic aspectsof the project. Once a project has received final approval, an investor mayreceive priority status, which - upon negotiations based on a project's specificmerits - exempts him, for a period of up to seven years from the first year ofoperation, from the following taxes and fees:
(a) Government real estate taxes;
(b) local taxes;
(c) license fees and related expenses;
(d) tax on rental space;
(e) income tax;
(f) employer's contribution for benefits based onemployee's salary;
(g) added value and sales tax;
(h) certain other minor taxes.
Furthermore, the Government finances secondary infrastructure such as accessroads to hotel sites and connections for electricity, telecommunications, waterand sewerage. Most of these expenditures, however, are recovered by the regularcharges levied for the services. Overall, these incentives are generous andshould be reviewed as the Government defines its tourism development strategyin light of the on-going marketing study.
1.28 As far as the Government's land policy is concerned, there are threecategories of ownership:
(a) land within 100 meters of the sea or the lagoon and 25 metersof a river in the public domain of the State;
(b) unexploited land, such as forest and savannah, in the privatedomain of the State; and
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(c) land with a real estate title (titre foncier), usuallyprivate property.
Land in the public domain of the State to be used for construction of hotelsis rented for a period of 30 years, renewable for 10 years, while title toprivately owned land, mostly in cities, can be transferred quickly.
1.29 In 1975 the Ivory Coast had no formal hotel training facilities.Practically all operational staff are trained on the job, while candidatesfor management positions are educated abroad. The turnover of service per-sonnel is high. The Government is aware of the importance of training andundertook negotiations with the Canadian International Development Agency(CIDA) for the construction and operation of a hotel training center plannedto train some 160 to 180 employees per year. The project, for which theCanadian Government has earmarked C$7 million (about CFAF 1.6 billion), isexpected to cover a period of about five years. During this time, about 12 to14 Ivorian counterpart instructors would also be educated in Canada at theexpense of the Ivorian Government. Meanwhile, as part of its own contribu-tion, the Government .decided to purchase an existing hotel to be convertedinto a temporary hotel school starting in January 1976. Ownership and manage-ment of the hotel will be turned over to SIETH0. CIDA was to provide fivespecialists to give on-the-job training and practical courses. The hotel wasto be run commercially and, once the Canadian hotel training center becameoperational,.was to continue to provide on-the-job training.
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CHAPTER 2: PROJECTIONS AND FUTURE POLICY
A. Projections
2.01 In preliminary documents prepared for the 1976-80 Five-Year NationalDevelopment Plan, the Ministries of Planning and Tourism propose a programbased on a growth rate for international arrivals on the order of 18 percentper year from 1974 through 1980 and 1985. This would mean 210,000 visitorsby 1980 and 422,000 by 1985. The number of business visitors would rise by11 percent per annum until 1985. Leisure tourism would grow by 30 percentannually up to 1980 and then drop to 20 percent per year until 1985. Theaverage length of stay would be about five days. Under these assumptions(see Appendix Table 7):
In 1980
(a) 107,000 business and convention visitors would spend atotal of 550,000 room-nights;
(b) 94,000 leisure tourists would spend 495,000 room-nights;
(c) room-nights in Abidjan and beach resorts of resident Ivoriansand expatriates and families, estimated at 85,000 in 1975,would increase to 110,000 by 1980 as a result of a reductionin the number of expatriates, an increase in travel by Ivoriansand an increase in local demand for the beach resorts; and
(d) traveling within the country by Ivorian and expatriate residentswould demand 141,000 room-nights in the interior, while shortvisits by tourists (circuit tourism) would require another 108,000room-nights in the interior.
In 1985
(a) business visitors would spend a total of 926,000 room-nights;
(b) 232,000 leisure tourists would spend 1,364,000 room-nights;
(c) room-nights in Abidjan and beach resorts for resident Ivoriansand expatriates would increase to 200,000; and
(d) another 210,000 room-nights for domestic traffic and 260,000room-nights for circuit tourism would be required in theinterior.
Under these assumptions, the ratio of leisure tourists in the number of totalvisitors would change drastically from about 25 percent in 1974 to 45 percentby 1980 and 55 percent by 1985.
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2.02 Based on these projections and counting on a room occupancy rate of65 percent in Abidjan (double occupancy factor of 1.25), 50 percent during a10-month season at the beach resort villages (double occupancy factor of 1.80),and 65 percent in the interior of the country (double occupancy factor of 1.25),the Government estimates that:
For 1975-1980
(a) 1,650 additional rooms will be needed in Abidjan;
(b) 1,000 more rooms will be needed in the beach areas -700 in the existing villages and 300 in Grand Bassam,about 40 km east of Abidjan; and
(c) 190 rooms will have to be added in the interior of thecountry.
For 1980-1985
(a) Abidjan will require 2,300 additional rooms;
(b) the beach areas will require 3,250 rooms; and
(c) the interior will need 800 additional rooms.
To build the projected 2,840 rooms needed by 1980 would require an investmentof approximately CFAF 30 billion for hotels alone at an estimated per roomcost of some CFAF 10 million at current prices. In accordance with the Gov-ernment's new policy, this amount would have to come primarily from privatesources.
2.03 The mission has made alternative forecasts (see Appendix Table 8).The main differences are in the demand for room-nights:
(a In beach resorts: The mission is not convinced that theundertaking is attractive enough for private investorswithout costly intervention by the Government, from whichit should refrain. A detailed cost-benefit analysis of thistype of investment should be undertaken before further com-mitments are made;
(b) In the interior differences especially stem from shortvisits of the circuit-tourism type.
2.04 The differences can be summarized as follows:
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Government forecast Mission forecast
1980 1985 1980 1985
Total room-night demand 1,404 2,960 1,121 1,745
of which in Abidjan 750 1,206 700 1,070
in beach resorts 405 1,284 260 415
in interior 249 470 161 260
2.05 Appendix Table 9 presents mission calculations of future hotelcapacity requirements based on alternative assumptions. Applying doubleoccupancy rates of 20 percent in Abidjan and the interior and 80 percent atthe beach resorts, the following assumptions have been applied for roomoccupancy rates:
Abidjan Beach Interior
65% 50% (10 months) 50%
The calculations show that, on the average, the Ivory Coast would need about1,430 additional rooms by 1980, 960 in Abidjan and 470 in the beach areas.The interior theoretically would have enough capacity. Although hotels inthe interior often operate far below capacity, a total of 100 rooms may never-.theless be needed in areas having no facilities at all, to be financed by theprivate sector. By 1985, Abidjan and the beach resorts would need another1,500 and 570 rooms respectively; by then 300 more rooms in the interiormay be justified. Because of the high proportion of "Abidjan-type" hotelsin the total, investment required for hotels would amount to about CFAF 15billion for 1976-80 at an estimated current cost of CFAF 10 million per room.Private interests may be able to generate such an amount, and funds shouldbe easier to obtain in view of the recent World Bank loan which will providepart of the long-term financing required for most of the 1,530 rooms to bebuilt through 1980. The financial requirements for the additional accommoda-tions projected to be needed by 1985 could amount to some CFAF 30 billion,assuming an average cost of CFAF 12 million per room between 1980 and 1985.
B. Policies
2.06 The Government's role in the tourism sector, following its newpolicy, would concentrate on:
(a) monitoring priority projects through the "AgrementPrioritaire", applying the Incentive Code and finan-cing infrastructure;
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(b) defining and promoting the Ivory Coast tourist product; and
(c) focusing on professional education.
It is estimated by Ivorian authorities that exercising these functions willrequire the following public funds:
Billions of CFAF
(a) Infrastructure 1.4
(b) Promotion 1.4
(c) Professional training 1.0
(d) Operational expenditures and subsidiesfor Ministry of Tourism (inc. SIETHO,ICTA and ONAA) 2.0
TOTAL 5.8
2.07 Although the above outlays would still mean considerable Governmentinput for the sector, the bulk of the capital required would be provided byprivate investors. Nevertheless, because of so many other claims on publicfunds, the Government should take a hard look at planned public investment.For instance, the tradition of building a hotel to accommodate high-rankingofficials and other visitors in each town that hosts the annual independencecelebration (so-called "independence hotels") has certain merits. However,these hotels are paid for by the Government, which later turns ownership andmanagement over to SIETHO. Due to overdesign, high operating costs and lowyear-round occupancy, many of these hotels run deficits which the Governmentcovers through subsidies to SIETHO. For the moment, at least two morestructures of this type are foreseen, one possibly in Katiola for 1977,another in Seguela for 1978. With an estimated size of 25 rooms each, thecost per hotel would amount to CFAF 200 million in current prices. A firststep toward improvement would be to reconsider the design standards of thesehotels, giving more attention to making the investment serve more purposes.The hotel, properly designed, could become an important piece of infrastruc-ture, serving the community in many ways. If hotel demand in a particulartown is permanently below capacity, considerations should be given to per-manently converting part of the complex to other uses. This could substan-tially reduce the roughly CFAF 500 million in operational subsidies thisgroup of hotels costs per year. Regarding training, given CIDA's C$7 millionproject that pays for virtually everything except the education of Ivorianinstructors in Canada, the amount as proposed above could probably be cut inhalf.
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2.08 Tourism promotion is a must but the proposed CFAF 1.4 billion appearsto be too large an investment.
2.09 However, in view of the new thrust that the Government intends to
give tourism, a properly funded, adequately staffed Ministry of Tourism will
be essential in carrying out and monitoring the various programs falling under
its responsibility. The allocation, as proposed above, of CFAF 2.0 billion
over the next five years seems low in this respect. Combining the two budgets
and spending considerably less than CFAF 1.4 billion on promotion would enable
the Ministry to carry out its other responsibilities adequately.
2.10 If tourism develops as projected (paragraph 2.03), the proportion
of this sector in GDP will have doubled by 1980 and quadrupled by 1985, as-
suming a real rate of growth of GDP of about 6 percent per year. However,
this still means that tourism will directly account for only 2 percent of GDP
in 1985 and that net foreign exchange earnings will be equally marginal.
2.11 The Government does not yet have a clear idea of the Ivory Coast'stourism potential or "product" and, therefore, does not have a clearly defined
marketing strategy. The country has no potential for competing with EastAfrica in terms of wildlife parks or with North Africa or Senegal's beaches.
Its scarcity of wildlife in existing national parks and a generally hot and
humid climate and dangerous sea currents are drawbacks to potential vacationvisitors. It is therefore important that the country define its tourism
product and direct its promotion efforts accordingly. The marketing studyfinanced under the recent World Bank loan for tourism development can make
an important contribution in this respect. Some Ivorian officials engaged in
the sector already have strong ideas on how to approach promotion of tourism.
They believe that mass tourism does not pay and that the social costs are toohigh compared to the meager economic benefits. They would rather focus on
selected groups of upper-income tourists whose expenditures, they believe,would be certain to leave a profit in the country. Such a concept is evident
in the Government's encouragement of high-standard hotels and its hesitance
to open international air traffic to competition and mass-oriented charters.In line with the theory of selective tourism is the definition of the tourism
product of West Africa in terms of "the people and their culture" and the
emphasis on folklore, dance and culture, which are thought to appeal parti-cularly to the more highly-educated tourist. The Ivory Coast would then be
promoted either as an indispensable part of West African circuit tours, with
a stop in Abidjan and side trips to the interior, or as part of larger East-
West African tours designed to familiarize the tourist with both the franco-
phone and anglophone nations of the continent. The marketing study may be
able to come up with an indication of the feasibility of these and other ideas.
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CHAPTER 3: CONCLUSIONS AND RECOMMENDATIONS
A. General
3.01 Business visitors constituted about 75 percent of total touristtraffic in 1974 in the Ivory Coast. This and the Government's desire tobuild a certain image has led to high standards, high costs and relativelyhigh tariffs. Leisure tourism is still small. Due to the business trafficdominance, however, room occupancy rates in Abidjan have been high. Hotelsin the interior were built on sites not necessarily attractive to tourists;consequently, occupancy rates have generally been below the break-evenlevel. Beach tourism, for which the Ivory Coast seems to have limited poten-tial, has been stimulated by the Government's investments in two beach resorts;the occupancy rates during the start-up period are encouraging but it isdoubtful whether results are profitable enough to interest the private sector.Many of these expensive ventures have been financed either with public fundsdirectly or through loans guaranteed by the Government. In fact, the Govern-ment provided 63 percent of hotel financing up to 1975 and owns 44 percent ofthe rooms. The government's decision to turn investing in new hotels over tothe private sector may bring standards and costs down to more appropriatelevels. As part of its program to stimulate private investors, the Governmenthas introduced generous incentives in order to ease the initial financialconstraints on private investors. Since well-conceived hotels in the IvoryCoast are generally profitable, they should be attractive to investors evenwithout many of the incentives currently offered. The mission, therefore,recommends that the Tourism Investment Code be re-examined, in particular itsvarious tax breaks.
B. The Ministry of Tourism
3.02 To become an effective participant in tourism affairs, the Ministryneeds to be reorganized and its functions and authorities clearly defined sothat its operational and administrative responsibilities can be properlyseparated.
3.03 The Promotion Department of the Ministry is inadequately staffedand funded. This department should-be-strengthened, preferably by dividing itinto three specialized sections: (i)-Marketing, in charge of defining andpromoting the country's tourism assets at-home and abroad; (ii) Public Rela-tions, responsible for press relations and documentary information; and (iii)Publicity, functioning in the fields of graphic design and promotional mate-rial. This department should also be responsible for the guidance and super-vision of the newly created "Comite National du Congres", which was designedto promote and coordinate convention activities.
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3.04 Hotel Training Programs, which so far have been administered by thePromotion Department, should be handled by a separate new training departmentwithin the Ministry. As the Government well recognizes, qualified personnel isa prerequisite to enhancing tourism activity and, therefore, requires specialattention. The Government appears to be in full support of the Canadian hoteltraining program, including the hotel school to be built with Canadian fundsand the "hotel d'application" for which the Government has chosen to purchasean existing hotel in Abidjan. However, the conversion of this largely un-trained segment of the labor force into an effective body of workers is along-term venture and will require perseverance on the part of the Government.It is, therefore, essential that the drive for training continue well beyondtermination of the initial "Canadian project". This means that the Governmentwill need qualified Ivorian instructors to carry on and even expand theprogram as it is conceived today. With the large increase in school leaversanticipated, there should be no problem finding suitable candidates. Thisprogram and the one advocated below could become important instruments in theGovernment's Ivorianization policy.
3.05 The Training and Organization of Artisans is another area of priorityto be tackled by the Ministry of Tourism. ONAA should give more guidance here,without trying to over-organize an activity which private local initiativeshould be able to handle. At present a large portion of this industry appearsto be in the hands of foreigners, and the Government does not have a clearpicture of the extent of its financial viability. Training for handicraftsmen,as contained in the project currently under consideration by the Ministry ofTechnical Education, is necessary if the industry is to become more importantto tourism and to the country's economy as a whole.
3.06 Hotel Classification, regulated by a decree, is carried out somewhathaphazardly. Several hotels have received high ratings that are not justifiedby their size or service. The Ivorian authorities must recognize that the clas-sification system is the visitor's only guide to hotel standards in the IvoryCoast, and it must therefore be applied rigidly and equitably. In addition,the Government should recognize that inspection and control of hotel standardsis an on-going process, and hotels should be reviewed regularly and their statusrevised if necessary, either upward or downward according to an objectiveevaluation. In terms of the physical standards for hotels, the classificationsystem is quite complete; it is weak in staffing standards, partly because ofthe absence of effective hotel training.
3.07 The creation of a Tourism Information Office should be considered,as there is currently no department responsible for dissemination of tourisminformation. Finding such information can be a trying experience for touristsunfamiliar with the country.
3.08 The Ministry of Tourism operates on a limited Budget, reflecting itsnewness and small size. The operating budget, including expenses for the threesupervised agencies, has risen from CFAF 227 million in 1970 to an estimated
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CFAF 410 million in 1974. The mission recommends that the budget be increasedto about CFAF 600 million in-1975 prices over the next five years to permitthe Ministry to become more effective. This could be achieved by spendingless than envisaged on tourism promotion. In the latter activity the missionrecommends cooperation with the Ministry of Commerce. Also, coordination ontraining issues with the Ministry of Technical Education may reduce cost andincrease effectiveness.
C. Investments
3.09 Hotel accommodations in the Ivory Coast have more than doubled since1970. While the increase has barely kept pace with rising demand in Abidjan,it has created over-capacity in the interior of the country. The high hoteloccupancy rate in Abidjan, with turnaway demand during peak periods, is a clearsign that there is a need for additional accommodations in the city. However,as most of the travelers staying in Abidjan are business visitors, construc-tion of new facilities should be approached with caution. The business market,rather stable and relatively predictable, does not normally respond to promo-tion campaigns. Sound planning, under the guidance and coordination of thepublic sector, should prevent over-capacity which would cause the privatesector to ask for new or extended incentives.
3.10 The Government has shown restraint regarding investment decisionsafter it became convinced that its policy had to be changed. For instance, thedevelopment of the so-called African Riviera project, which consisted of 4,000ha of land located in Abidjan between the Cocody and Bingerville quarters, wasredefined at an early stage. This project, a joint venture of the Governmentand a foreign promoter (MAFIT Trust Company), was originally designed to con-vert the Riviera, over a period of seven years, into a high-income residentialcommunity for 120,000 people and an international tourist destination with atotal capacity of about 7,500 hotel rooms. In 1971, the total cost of thefirst phase of the project (about one-third of accommodation facilities) wasestimated at about CFAF 55 billion. After the Government decided to scaledown the project massively, the Riviera project consisted of some housingcomplexes for Government employees, a 300-room hotel (Hotel du Golf, whichopened in 1976, and is managed by Intercontinental), and a planned amusementpark, the need for which does not seem to be urgent. The recent World Banktourism project could help finance construction of about 1,000 hotel rooms inAbidjan through the seventies.
3.11 The supply of hotels in the interior of the country exceeds demandconsiderably. Occupancy rates are in general below the break-even point.The financial burden of these facilities could probably be lessened by makingthem available for different purposes or by partly or completely transformingthem to serve in other ways. If the Government decides to build more "inde-pendence hotels", the use of multi-purpose designs should be considered fromthe beginning.
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3.12 Beach tourism is a relatively new feature in the Ivory Coast, andoccupancy rates have been rising steadily since the two villages were openedin 1972 and 1973. Poor occupancy during the first two years can be attributedto lack of promotion. Both villages are normally fully booked during December,January and at Easter and have slack periods during the rest of the year. Itwould be advisable to leave expanding beach resort capacity to the privatesector.
D. Marketing
3.13 Once the country's tourism product is defined, the Government willbe able to devise a long-term tourism development policy. "The people andtheir culture", folklore, dance and handicrafts, as well as the traditionalvillages in the country's interior seem to offer potential. Nevertheless,the success of these assets will probably depend on how they are promoted.In the same vein, it could be feasible to promote the Ivory Coast as a"necessary" stop-over on West African and East-West African circuit tours.In this connection, however, the Government must realize that the price ofairfares is - and with increasing tariffs will continue to be - an importantcriterion in the choice of a vacation spa, and it might want to considerchanging the policy with regard to international airlines and take up negotia-tions for special group fares with international carriers.
3.14 Although the Ivory Coast's leisure tourism potential seems limited,it does offer an additional means of economic diversification. Furthermore,development of this potential will produce trade-offs in the form of showingthe Ivory Coast to the outside world and increasing contacts between thiscountry and the rest of the world. Therefore, the sector should be promoted,keeping in mind that its direct contribution to the economy, estimated at 1and 2 percent of GDP in 1980 and 1985 respectively, will be limited. Publicexpenditure should be tailored accordingly.
CLASSIFICATION, INVENTORY, INVESTMENT, OWNERSHIP AND MANAGEMENT OF HOTELS (1974)
Investments Ownership in % Management in % of RoomsType of in millions Private State PrivateHotels Rooms CFAF State Ivorians Foreigners (SIETHO) Ivorians Foreigners
Luxury 1066 12,520 66.1 5.1 28.8 -- 33 67
Other int'l 875 2,813 48.0 25.0 27.0 31 18 51standard
Vacation 710 3,661 76.3 23.0 0.7 49 7 44villages
Economy 690 1,591 -- 80.0 20.0 52 48 --
Others 459 459 50.1 49.9 -- 57 43 --
TOTAL 3800 21,044 60.1 17.5 22.4 33 29 38
SOURCE: Ministry of Tourism and Mission estimatesJune 1975
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APPENDIXTable 2
CONSTRUCTION COST OF PRINCIPAL HOTELS 1970-75
Number of Investment Investment/RoomHotel Location Rooms Date (million CFAF) (million CFAF)
1/ Excluding 9,000 arrivals which came to the country in 1974 for family visits. Planners have estimated thatthis number will remain constant through 1985.
SOURCE: Ministries of Planning and Tourism, June 1975.
APPENDIXTable 8
MISSION PROJECTIONS OF HOTEL ARRIVALS AND ROOM-NIGHT DEMAND
1/ Excluding 9,000 arrivals which came to the country in 1974 for family visits. Planners have estimated thatthis number will remain constant through 1985.
SOURCE: Mission estimates, June 1975.
APPENDIXTable 9
MISSION PROJECTIONS OF DEMAND FOR HOTEL ACCOMMODATIONS
ABIDJAN BEACH INTERIOR50% Occupancy
65% Occupancy during 50% Occupancy10 months
1980 1985 1980 1985 1980 1985
1/Demand for room-nights ('000) 584 892 145 231 135 217
2/Demand for rocms 2,460 3,760 970 1,540 740 1,190
3/Supply of rooms 1,500 2,260 500 970 1,500 1,500
Number of additional rooms required:according to mission 960 1,500 470 570 - -according to government 1,650 2,300 1,000 3,250 190 800
1/ Demand for room-nights is projected visitors X length of stay (see Appendix Table 8).double occupancy factor
2/ Demand for rooms is demand for room-nights365 X occupancy rate
3/ In the 1975-80 period about 200 rooms will have to be replaced in Abidjan and
