State throws Sh2b lifeline to struggling hospitality sector

Tuesday, June 2nd, 2020 00:00 |
Tourism CS Najib Balala. Photo/PD/FILE

The hospitality industry has been handed a Sh2 billion boost to cushion it from coronavirus shocks that have resulted in hotel closures and job losses.

President Uhuru Kenyatta announced the financial support at State House, Nairobi, during this year’s Madaraka Day celebration that was followed by Kenyans virtually in compliance with the social-distancing measures aimed at containing the spread of Covid-19.

The Head of State said the cash is expected to jump-start the sector which he described as important and to protect players from heavy financial losses.

A global lockdown saw the sector’s financial fortunes dwindle, a move worsened by termination of local and international flights in Kenya and social distancing protocols since March when the government effected measures designed to mitigate the spread of Covid-19.

Exchequer support

“My administration will refocus our intervention by offering an initial Sh2 billion exchequer support to hotels and related establishments to ensure that they maintain their staff compliment,” Uhuru said.

This package will help some of the players in the sector which are on the verge of collapse having been dependent on foreign tourists. 

In 2019, some 2.05 million international visitors arrived in Kenya, with 1.42 million landing in Nairobi while 1.3 million landed in Mombasa.

A total of 29,462 visitors arrived at other airports and 467,179 visitors arrived by land. In 2018 total arrivals were recorded at 2.03 million.

The pandemic came in at a time the sector was trying to reorganise itself but the shocks has since seen a lot of layoffs.

Last week, a series of top hotels including Fairmont Norfolk and Serena sent their employees home, citing lack of business.

“The situation is being monitored on an ongoing basis and we hope and pray that we are able to open for business in the not too distance future,” a memo from Serena management reads in part.

Although the government, through the Ministry of Health has laid out elaborate measures to re-open hotels and restaurants, the steps are not paying off for major establishments. 

Last month, Tourism CS Najib Balala said hoteliers and other players will only be allowed to work after satisfying operational protocols and getting a compliance certificate from the Ministry of Health.

“After meeting all requirements laid out, inspection and certification by County Health officers will be free within 24 hours,” he said then.

Balala warned that without new strategies the lockdown could see more than 1.6 million Kenyans lose their jobs thereby destabilising the sector for years.

Health CS Mutahi Kagwe said restaurants would be re-opened under strict conditions that allowed for the sale of alcohol alongside meals in the restaurants.

Emergency response

The conditions, approved by the National Emergency Response restricted clients to maintain a distance of four (each) per square metres as long as the eateries re-opened between 5am to 4pm daily, in addition to provision for take away meals. 

“The take-away regulation did not work for us because we are located far from town. We only got one take-away guest after the order was issued,” said Omar Ikram, General Manager at the Nanyuki located Maiyan Hotel.

Parliamentary Budget Office (PBO) has said Kenya will not generate significant revenues from its tourism resources this year even as the Cabinet begins to discuss a stimulus package for the sector.

When analysing of the budget estimates for the 2020/21 year, the Parliamentary Budget Office (PBO) allayed fears that the Tourism ministry will meet its internal revenues (appropriations-in-aid) target of Sh3.8 billion due to Covid-19 shocks.

The money would have come from catering levies paid by hoteliers and restaurant owners but with most businesses shut down to implement public health measures to curb the spread of Covid-19, the cash is a pipe dream.

More on National