Tanzania faces blow-back from its recent VAT introduction with its all-important safari industry struggling to maintain its leading position in East Africa.
The remarkable decline in Tanzanian booking requests received by SafariBookings.com – the largest online marketplace for African Safari Tours – highlights the damage being caused to that country’s tourism industry, after the introduction of the Value-Added Tax (VAT).
About 15 months ago, the Tanzanian Government shocked its safari industry with the introduction of an 18% VAT on tourist services.
Services which had previously been exempt from the tax, but are now subject to the Tanzania VAT, include ground transportation, guiding fees, park fees and camping fees.
Uganda has benefited from the VAT imposed on the Tanzanian safari industry in 2016.
After analyzing more than 135,000 booking requests from clients – made before and after the VAT was introduced – it became clear that Tanzanian tour operators lost significant business.
At the same time Uganda claimed a larger slice of the market share in booking requests in the competitive East African safari industry.
Booking-request analysis confirmed that the prices of Tanzania safari tours had increased by more than 14% on average.
At the same time, clients had reacted by moving their business elsewhere – Tanzania tour operators lost more than 13% of their booking requests on the SafariBookings.com platform.
Tour operators in Uganda benefited from this move away by safari-goers from Tanzania – they saw a dramatic increase in booking requests of 44%. In relative terms, once the growth of SafariBookings.com is taken into account, this figure becomes 16.33% – representing a substantial increase in its market share.
The Ugandan tourism industry appears to be a big winner from last year’s VAT rise in Tanzania.