Tanzania’s safari industry is facing significant challenges following the introduction of an 18% Value-Added Tax (VAT) on tourist services, threatening its position as a leading destination in East Africa.
The impact is evident in a notable decline in booking requests for Tanzanian safaris on SafariBookings.com, the largest online marketplace for African safari tours. This downturn has raised concerns about the health of the country’s tourism sector.
Fifteen months ago, the Tanzanian government implemented the VAT, which applies to services previously exempt from taxation, including ground transportation, guiding fees, park fees, and camping fees. This unexpected move has had a direct effect on safari pricing and demand.
In contrast, Uganda has seen a positive shift in its tourism sector, capitalizing on the difficulties faced by Tanzania. Analysis of over 135,000 booking requests before and after the VAT introduction reveals that Tanzanian tour operators have experienced a significant loss in business, with booking requests dropping by over 13%.
The data shows that the average cost of safari tours in Tanzania has risen by more than 14%, prompting potential clients to seek alternatives. As a result, Ugandan tour operators have benefited from this migration, enjoying a remarkable 44% increase in booking requests. When adjusted for the growth of SafariBookings.com, this translates to a 16.33% rise in Uganda’s market share.
The situation underscores the competitive nature of the East African safari industry and highlights the challenges Tanzania faces in maintaining its appeal amidst rising costs and shifting traveler preferences.
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