Hotel, tourism sectors in the woods as Covid bites

Driving into the Sankara Nairobi, one easily notices that the main entrance is locked, even though the five-star hotel re-opened way back in September. 

Guests use a smaller side gate to access the hotel since it shut down for more than five months in the wake of the Covid-19 pandemic that was first reported in the country in March last year.

“We are operating just one wing of the hotel since reopening, one was closed down. And even then, we are operating at between 15 and 20 per cent capacity, down from the former 65 per cent annual average,” Krishna Unni, the Sankara Group general manager, said in a statement on Tuesday.

At the coast, Kenya’s tourism hub, prominent hotels such as Crystal Bay, Seven Islands, Kola Beach, Jacaranda Beach, Kilili Baharini, Amani Tiwi, and Malindi Dream Garden remain closed. Others such as Severin Sea Lodge say they are not receiving guests as they are under repair. Some of the beach hotels opened in December to serve revellers in the festive month but closed by January 5 after bookings dried up, as global travel restrictions continue to weigh heavily on the tourism sector.

230,000 employees out of work

The Covid-19 pandemic has put at least 230,000 employees in the hotel and tourism industry out of work, according to an estimate by the Ministry of Labour and Social Protection.

The massive job losses have denied income to bread winners and thousands of small and medium businesses that rely on the industry.

In 2019, tourism injected Sh163.6 billion into the Kenyan economy as per figures released by the Ministry of Tourism in February last year, just before the pandemic hit Nairobi, but this amount has reduced to a trickle that is hardly enough to keep the hotels running.

The government made available Sh7.2 billion soft loans to stimulate recovery of the tourism sector, but only Sh1.6 billion of this amount has been taken, according to the Tourism Finance Corporation (TFC) Managing Director Jonah Orumoi, attributing the low uptake to the bleak outlook of the sector.

At the imposing entrance of the Sankara hotel building, there are likely more hand washing and sanitising points than the people at the lobby, with the busier of the two operating restaurants serving about six guests at about noon Tuesday.

Sankara became among the first businesses to halt operations after Covid-19 was officially reported in Kenya on March 13, 2020, closing its doors on March 21, 2020. The management sent home the entire workforce on half pay.

Redundancies

“In June 2020 the hotel declared a number of redundancies, reducing the number of staff to just over a third of the workforce before the pandemic,” Mr Unni said.

The hotel resumed operations in September last year, but things have not quite been the same. Just a section of the one wing that remains open is being utilised.

Only two of the total five restaurants are in operation and even these are serving half the capacity of clients.

Operations at the gym have been scaled down to about a quarter and the hotel remains heavily dependent on meetings and conferences by local institutions.

When Sankara reopened in September, the management recalled only a third of the staff that were spared the sack.

“When we are likely to resume normal operations remains unknown. However, we are optimistic that with the release and distribution of the vaccine that the pandemic will soon be under control and that possibly recovery will be from the second half of 2021,” Mr Unni told the Nation.

His hope reflects the general feeling in the hard-hit industry, especially the big hotels which say they are operating at between 15 and 30 per cent capacities.

Nearly-deserted

A visit to many of the city hotels showed nearly-deserted spaces. The lucky ones to have escaped the sack are forced to work in shifts, receiving just a small portion of their normal salaries, while many of their colleagues were sent home and there is no plan to recall them, at least at the moment.

At the Sarova Panafric, hotel manager David Gachuru says the establishment is operating at about 20 per cent of its capacity, with bed occupancy and food and beverages business hit the most.

Besides putting employees on shifts to prevent a massive layoff, the hotel is having to employ a myriad of other cost-cutting measures. 

“The operating costs for the hotel have become very high with all the precautions that we have to put in place to meet government health guidelines which means the profit margin especially on things like food is very low. Investors are not getting anything, we are only getting money to keep running,” Mr Gachuru said.

At the Radisson Blu Hotel at the Nairobi Arboretum, just as in Sankara and Panafric hotels, the management is equally clinging to the hope that the Covid-19 vaccine will soon be available in Kenya, and international movement restrictions will ease to get the global economy back on its feet.

The hotel’s marketing manager, Randy Ngala, told the Nation that the facility has been operating at between 35 and 45 per cent capacity, since the easing of Covid-19 restrictions in July last year.

Curfew

But the curfew has limited operating hours for the business. Radisson’s sister branch in Nairobi’s Upperhill closed last year, as the heat of the pandemic proved too much for the business.

The Radisson Blu Upperhill branch closure sent hundreds of workers home. Other prominent closures were the Dusit hotel in Westlands, Nairobi, Hotel Intercontinental and the Fairmont Norfolk Hotel.

At the Norfolk Hotel Tuesday, all gates and doors were closed with no movement inside, while flowers on the fence are overgrowing, a sign that the facility has gone for a while without operations.

Stimulus package

Most of the hotels are trying their luck in the government’s stimulus package that was meant to cushion the industry, although none that spoke to Nation admitted to have benefitted.

“We have applied for the government’s stimulus package to boost our operations through the Kenya Association of Hotelkeepers and Caterers (KAHC). We are now waiting for the outcome after we submitted the required documents,” Mr Ngala said.

The Tourism Finance Corporation boss says other regions have surpassed the Coast in terms of credit application and submission of all the required documents for the soft loans.

"The Sh1.2 billion allocated for other regions has already been committed. The Coast region where 80 per cent depend on tourism has taken Sh1.5 billion (out of Sh6 billion available) which is yet to be committed to the hotels," said Mr Orumoi.

The Coast hotel owners say they cannot get into more debt since the sector is not still vibrant and they will have difficulty in repaying the loans.

Kenya Tourism Federation Chairman, Mr Mohammed Hersi, in an interview, said hotel owners are hesitant to pile up more loans on top of what they had already borrowed prior to the outbreak of the pandemic.

Before the December festivities, some of the major hospitality facilities in Nyeri such as the Outspan Hotel, Greenhills Hotel and White Rhino Hotel had shut down.

Toney Kitonga, general manager at the Green Hills Hotel in Nyeri, told the Nation that they are still shut but are planning to re-open in the middle of this year.

“During the shutdown we have minimal housekeeping and maintenance. We have taken our time to reposition the hotel and only open after reviewing and aligning our new normal activities to our long term business strategy,” said Mr Kitonga.

Labour intensive

Mr Edward Wangechi, chairman of the Kenya Association of Hoteliers and Caterers (KAHC) in Mt Kenya Region, said that the hospitality industry was hit badly because it is labour intensive and revolves around human resource.

He adds that the high maintenance costs quickly put many of them out of business when Covid-19 hit.

“The middle and average person cannot afford the high-end facilities,” Mr Wangechi added.

Businessman Thuo Mathenge, owner of the Bantu Africa Resort in Nyeri, beat all the odds to stay open.

“Corona came into the country while the business was at its peak but I decided not to shut down. We resisted Covid by ensuring that the facility was fully equipped according to the new regulations that had been made by the Ministry of Health,” says Mr Mathenge.

Reporting by Peter Mburu, Brian Ambani and Caroline Ndiritu

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