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Kenya: Hospitality Industry Gasps for Breath Under Current Lockdown

Kalume Kazungu/Nation Media Group

A luxurious hotel within Lamu’s Shella Island (file photo).

13 APRIL 2021

The Nation (Nairobi)

By Ritesh Barot

Kenya has time and again proven to be a resilient economy. Last year, we witnessed locust invasions, heavy rains, floods followed by an absence of rains in agrarian lands.

However, the Covid-19 scourge dealt a blow that left the entire country reeling. The pandemic emerged as the greatest challenge to our nation largely dependent on the global travel and tourism sector.

Kenya, with its vast vistas is a portion of earth as God intended the world to be. Pristine game reserves, an abundance of wildlife, sandy white beaches, the Great Rift Valley, Mount Kenya combined with ambient weather, fresh produce, incredible genuine hospitality, has traditionally made the country a favourite with high value western tourists.

Tourism contributed approximately 10 percent of Kenya's annual GDP, employing over two million people. It was this segment that got decimated with onset and continuous grip of Covid-19.

The tourist inflow changed. With lockdowns across the globe, flight and travel restrictions, Kenyan tourism ground to a halt for most part of last year and started making tentative recovery in the last quarter of 2020.

Travel restrictions

During the month of March 2020, with the lockdown and travel restrictions being put place, hospitality sector saw this as a harbinger for harder times.

International travelers and locals who had booked holidays and accommodation for this Easter season would require refunds and hotels/lodges faced booking cancellations.

In May of the same year Fairmont Norfolk hotel (open since 1904 in Nairobi), one of the most iconic facilities in Kenya closed its doors indefinitely due to the impact of Covid-19 on their business.

Most hotels across Kenya have faced a similar situation and resorted to partially closing down sections and staff layoffs. With reopening of borders and resumption of international travel in August 2020, there was temporary relief to the tourism sector. The strategy shifted to encourage local tourism.

In theory, robust domestic tourism can shield the industry from vagaries of the international tourist market thereby bringing steadiness in the industry.

However, with the Covid-19 pandemic third wave hitting the country, all industries remain affected and income levels of the average household have reduced drastically, thereby relegating holiday plans to the back burner.

Laying off staff

The hospitality industry had just about started emerging from hibernation to start erecting the goal posts again when the second lockdown struck.

With the choking measures taking place just before during Easter 2021, some hotels/lodges are once again laying off staff and contemplating indeterminate closure.

Businesses are interrelated. Hotels have downsised operations and due to huge revenue losses, have probably taken loans to revive business. With this second lockdown, hospitality will suffer a setback yet again.

These loans issued by banks would now most likely be provisioned as possible bad debt, having an effect on the profitability of lenders and thereby affecting investors.

As at January 2021, an estimate by Kenya's hoteliers said the country had lost over Sh150 billion in tourism revenues. These numbers do not provide a complete picture of the adverse impact this pandemic has unleashed.

The misery of the semi-skilled and unskilled labour hit due to the suffocated hospitality and tourism industry is unaccounted for. Livelihoods of the service level individuals who are dependent on tourists for sustenance is severely impacted as there is no other offtake channel for artifacts and handicrafts.

Business recovery

We cannot anticipate any major conferences, conventions and exhibitions to take place until the pandemic is under control, thereby causing further uncertainty to the business including the newer ones which have recently come up around Nairobi and other major cities across Kenya.

This year's Easter would have been an ideal time to attract international tourists, especially with the Kenya shilling having slightly weakened against the Dollar.

During this period of great uncertainty, all companies (not only in the hospitality industry) need to be compassionate. Laying off further trained staff will not give long term relief to the strained finances of the companies, but will deplete them of skilled resource which is crucial for business recovery.

Companies need to dip into their reserves and keep employment as one of their primary priorities at this time for the betterment of the economy.

Contrasted with further lockdowns, now that consignments of Covid-19 vaccines are reportedly trickling into the country, we hope vaccines are quickly and effectively distributed and administered to the vast population and our economy can emerge from the situation where businesses and livelihoods are coming to a grinding halt.

The writer is a business and financial analyst, humanitarian, conservationist and occasional artist.