The Mauritius global financial crisis

The Mauritius globose financial crisis3.0 Global Financial Crisis in Mauritius Evidence from Macroeconomic IndicatorsThe abbreviation beneath is based on around macroeconomic indicators constructly gross domestic product evolution ramble, some touristry comp anents ( reaching, improvement, proceeds of hotels and room, employment rank, FDI inflows, BOP) of the Mauritian economy and aura Mauritius in the event of the crisis.3.1 GDP growth rateMauritius relies on three traditional pillars specifically agriculture, E.P.Z manufacturing sector and touristry but the food market structure changes everywhere time. From 2006 to 2008, the growth of GDP was constant but unexpected decline of 2.4%, from 5.5% in 2008 to 3.1% in 2009 as shown in skeleton 1 below. The main reason behind the decline was the mend of the financial crisis on Mauritian sectors. The GDP improved to 4.2% in 2010 compare to 2009 projecting a gradual recoery from the global crisis but this was not the case in 2011 as at that place was a drop of 0.7%. This means that global crisis has a continuous effect on the economy as it cannot be puzzle out overnight. However, there was a slight maturation by 3.5% in 2013. gens 1 Real GDP Growth Rate 1994-2013 point of reference CSO, theme Accounts of Mauritius, 20123.2 Global financial Crisis and Mauritian touristry Industry3.2.1 Tourism Arrivals and touristry receiptsIn pre-crisis era, the tourism and prompt industry has been the mammothst flourishing sector. Since the easy 90s the tourism sector has sleep withd a boom. Since 1994, there was a speedy growth in the number of tourist arrivals in Mauritius that led to an augment in the tourism receipts as shown below in figure 2.The amount of tourist arrivals has increased from 400,526 in 1994 to 993,106 in 2013. The amount of tourism has boosted from Rs 6,415 million in 1994 to Rs 40,557 million in 2013 indicating an increase of Rs 34142 million over the past age. in that respect has been around 532.2% increase in the tourism receipts the past 20 categorys. There was a very little increase in 2000 to 2001 in number of arrivals and the amount of receipts was quite the like in 2001 and 2002 delinquent to the 9/11 terrorist attack in hot York on the World Trade Center in 2001.Figure 2 Tourism Arrivals and tourism receipts for expiry 20 years showtime Central Statistical Office MauritiusFor the past few years, Mauritius has experienced antagonistic impacts on the tourism sector overdue to the global financial crisis. The 930456 arrivals in 2008 indicated a growth of 2.6% but the rate decreased by 13% compare to the growth of 15.06% in 2007. However, the difficult times and global crisis started afflicting our shores by slowing down the growth. Eventually in 2009, the tourism industry was just now hit as it showed a oppose growth of 6.4% decreasing by 59,100 of arrivals between 2008 and 2009. There was also a heavy decline in tourism receipts around 13.4% b etween 2008 and 2009. During 2010, Mauritius maintained the highest arrivals growth of 7.3% due to the incentive interpreted by the government. The tourism arrivals rebounded by a growth rate of 3.2% in 2011 and 0.08% in 2012. The tourism receipts boosted up in 2010, 2011 and 2012 but there was a decline by 8.6% in 2013 although the number of arrivals increased by 2.9%. The disparity in 2013 would be explained as there was a decrease in hotel price in establish to curl European clients and the markets has been opened to Asian countries.The figures used are attached in Appendix A.3.2.2 Number of Hotels and hotel roomsIn Mauritius, the number of hotels and rooms has grow along with the growth of tourist arrivals. In 2013, there were a center of 107 registered hotels and 12,376 rooms. There was a closure of 3 hotels in 2011 and 10 hotels in 2013 which led to a decrease in the number of rooms. The graph below shows the trend of hotels and room available in Mauritius over the past 10 years.Figure 3 Number of Hotels and hotel rooms for the past 20 yearsSource Central Statistical Office Mauritius3.2.3 Employment in Tourism SectorFigure 4 Employment in Tourism Sector, MauritiusSource Central Statistical Office MauritiusThe tourism sector has been creating plenty of jobs over the past years. From the figure above, GFC has shown its huge impact chiefly on travel and tourism as there is a continuous decrease from 2006 to 2007 and all 2011 there was a slight increase. The restaurants have only been affect in 2011 with a slight decrease around 2.2%. Tourism sector was mainly touched in 2009 so the employment in hotels demonstrated it by a decrease of 1836 jobs and in 2012 there was only a petty decrease. Overall, the positive employment in tourism sector had a cast out impact around 6.1% in 2009 and 0.38% in 2012.3.2.4 Balance of payment (BOP)There are various components of the economy in Mauritius that contributes to the BOP namely tourism earnings, Foreign Dire ct Investment (FDI) and invisible exports. Since the plague of GFC, the phenomenon of global imbalances that is, the coexistence of large current account shortfalls and surpluses in the global (Servn and Nguyen 2010). The continuous shortfall in the current account indicates a slowdown in the Mauritian economic activity and growth. Meanwhile, the surplus in the services account showed a decline of around 17.6% in 2008-09 due to a depression in our principal export markets in the EU and UK meant that services fell by 17.6% in 2009 (see Table 1 below). The service showed sustained growth to Rs 27,485 in 2011-12. However, this was not reflected on the financial statement of listed hotel convocations which showed a declining profit.Table 1 Balance of paymentSource Bank of MauritiusIn relation to FDI inflows, prove to the changeable economic environment, many companies have postponed their investment schemes. While some projects in the tourism sector have been deferred and there was a lso delays in the construction of airport project. Tourism industries have responded to the crisis by reducing costs, desolate the adaption price in hotels, changing work methods and prolonging investments and recruitments. Figure 6 below, shows the deterioration in FDI in tourism sector from 2007 to 2012 and only 2009 there was an increase of USD 10.5 million.Figure 5 Foreign Direct Investment by tourism SectorSource photos.state.gov*Figure for 2012 is for the period Jan-Sept only3.3 Air MauritiusAir Mauritius is the theme airline of Mauritius. Ujooha, the CEO of Air Mauritius (annual report, 2008/09) mentioned that GFC would be remembered as the worst in its history of airline industry. Air Mauritius was badly moved(p) by the GFC as it faced huge losses on burn hedging where they hedged on fuel for USD 104 a gun barrel for 2 years until August 2010 but fell to USD 33 a barrel in 2008. With the worldwide recession, the number of passengers carried has declined around 9% in 2008 /09 and 4.9% in 2009/10 as shown figure 6. In 2012, due to the reduction in seats on European markets so there was a issue of flights to Rome, Munich and Vienna and it had an impact on 2012/13. Hence, the GFC really had a negative impact on Mauritian tourism sector and airline industry as Air Mauritius is still trying to overcome that crisis.Figure 6 Passengers carried revenue enhancementSource Air MauritiusNew Mauritius Hotels (NMH)NMH is also known as Beachcomber Hotels, is one among the largest and oldest of hotel in Mauritius. It consists of eight hotels operating in Mauritius under its brand nameRoyal PalmDinarobin Hotel Golf SpaParadis Hotel Golf ClubTrou Aux Biches lag SpaShandrani Resort SpaLe VictoriaLe CanonnierLe MauriciaNMH had an amazing year in 2007 which has describe a profit hit around Rs 1,969m. This profit fostered NMH to invest immensely in the development of the companies. hence the financial chaos put a cessation to the ascendancy of the business in 2008. Nevertheless the incomes of company for nine months boosted by 8% expiration on June 2008, the companys profits for the similar period compared to last year fell dramatically. Since the arrivals in tourism dropped by 7.6 % at national level, receipt for the conference declined by 16.2% for the following year and revenues plummeted by 8.6% in the year 2009. There was no exception in 2010 as the group showed another decline in revenue of 7.7%. The company also reported this fall because of the shifting and fluctuation in demand towards low-priced accommodation and huge discounts by some hotel operators. The main reason behind it was due to fragile and weak educates that overcame Europe. The year 2012 had a harsh trading condition as there was a drop in the median(a) of knob night spending because the exchange rates were unfavorable but the total revenue improved by 6.4%. In 2013, there was a negative drop of -3.5% in total revenue due to the heavy discounting rate provided by their competitors.Sun ResortsSun Resorts is a sumptuousness and deluxe hotel group that owns five hotels in Mauritius namelyLe Touessrok (5-star resort)Long Beach (5-star resort) dinero Beach (5-star resort)La Pirogue (4-star resort)Ambre (4-star resort)Sun Resorts began to get worse in terms of both rates and mass by the end of year 2008, as the current turmoil in the world financial markets had affected our core source markets. While the decrease in occupancy rate persisted, the groups profits kept on decreasing in earnest also and in the end of 2009, Sun Resort showed a deficit of Rs105m. The company reported Rs133m loss in 2010 as the market pain that is staying uncertain and difficult and to predict. In 2011, there was a decrease of 2 % in the groups revenue so in order to lessen these risks the company has diversified its approach towards some emerging markets of Asia and Russia.Naade ResortsThe luxury hotel group, Naade Resorts owns one-villa in Blue Bay at Ile des Deux Cocos and 6 hotels in Mauritius namelyBeau RivageLegendsLes PavillonsTamassaMerville BeachLe TropicalIt started to experience a decrease in terms of both revenue and volume in 2008, as the decline in the rate of occupancy keep and Naade Resorts profits kept on falling sharply. The group reported a negative increase of 4% in the revenue in 2009. The reasonable revenue per room decreased by 41.5% in 2008 and decreased by 0.8% in 2009. As the group itself reflected the impact of the GFC in their annual report, it finish with a deficit of Rs367m in 2009. The overall hotel groups death penalty was extremely affected by the destructive effect of the GFC on the arrival of tourists for both the Maldives and local operations and together with an elevated gearing influenced harmfully on the performance of the hotel. Naade Resorts ended its 2012 with an increase of 19% in the average revenue per room compare to 49.9% in 2006.3.4 ConclusionThe chapter 3 shows that GFC has laid low(p) the GDP and tourism sector in Mauritius. Moreover measures have been taken by government to overcome it and to increase the amount of tourist arrivals. The attached chapter will analyse the impact of GFC on tourism sector and varied steps of analyzing.