Woes of hoteliers during Covid-19

A visitor at a hotel uses disinfectant before accessing the hotel premises. Most hotels in Kampala have seen a drop in the number of visitors with others canceling bookings. PHOTO | ABUBAKER LUBOWA

By Joanita Mbabazi

Since the easing of the lockdown, some parts of the vulnerable economy were opened to resume business by the President.
However for hoteliers, the ‘new normal’ is biting hard as they enforce the Standard Operation Procedures (SOPs) from the Ministry of Health such as social distancing.
Clients who had booked for weddings and events for more than 100 people are now asking for reimbursements because things have to be scientific.
According to Mr Jean Phillippe Bittencourt, the general manager Kampala Sheraton Hotel and Uganda Hotel Owners Association (UHOA) chairperson appointee, told Daily Monitor that clients who had booked events before Covid-19 of more than 400 guests have now revised their guest list to about 150. This means they have to renegotiate with their clients upon these changes as they are not willing to let go of their cash on guests that they are not going to spend on.
“Scientific events have affected venue capacities and clients do not want to increase on their expenditure. This is affecting our operations in business to break even,” says Mr Bittencourt.
Mr Bittencourt says an agreement has been reached to refund clients upfront payments in installments as part of this money has already been used for hotel operations.
Occupancy rates drop
Occupancy rates for most hotels are being affected as people are now being cautious to avoid being infected with Covid-19. This has greatly affected the dining experience and accommodation in many hotels despite enforcing the SOPs. People have resorted to deliveries and takeaways hence restricting client spending on these services.
“We have cut our occupancy rates from 58 per cent to less than 5 per cent and these are continuing to deteriorate to even less than 2 per cent in most hotels across the country,” he adds.
Besides, tapping into local tourism is affecting pricing and this bears its own risks. Local tourists are only willing to spend less for hotel services and relying on this is not increasing profitability,” Mr Bittencourt says.
Tentatively, Entebbe International Airport is expected to be opened in September this year, but the sector players are worried about the proposed 14-day quarantine for visitors as an added extra cost to the tourists.
“Tourists who have planned for shorter holidays cannot spend 14 days in quarantine. Government should provide testing kits for tourists to get their results before they proceed to their destinations,” he says.
However, according to Mauku Moses, a member of the Hotels and Allied Workers Union, it is very unrealistic for anyone in the hotel business to say they will make profit for the remaining months of the year yet most of the businesses right now are focusing on surviving. The status quo has remained the same.
Hotels are still paying taxes, utility tariff rates which they advocated to be reduced by 40 per cent, a move government rejected. Employees salaries have to be paid, some loans have been deferred to future dates.
“Most hotels have recorded a huge loss of revenue despite mounting costs many are still struggling to get back into businesses as all cash flow avenues have been affected. Foreign tourists cannot travel because the airport is still closed and even upon opening they are not certain if the numbers will go back to normal. Government should consider giving hoteliers a tax waiver for at least some period of time,” Mr Mauku says.
The Value Added Tax (VAT) waiving on accommodation does not benefit the hoteliers. “It only benefits the consumer. This does not favour us the hoteliers providing accommodation especially the expenses we meet when providing accommodation. Deferring PAYE is not a relief to the employer because we still have to pay the employees at the end this Covid-19 period which many are uncertain of,” says Mr Haruna Ssentamu, the financial manager at Victoria Hotel.
Health and economics still sit on the different sides of the weighing scale in light of decision making for government in the battle for lives verses sources of livelihoods for many people in different sectors.
Statistics for hotels in Uganda
According to the Uganda Bureau of Statistics, Uganda has more than 6,000 accommodation facilities in the country. Of these, 95 per cent are owned by the private sector while 5 per cent are public aided.
The sector directly employs more than 250,000 persons and 90 per cent of the employment in this sector relies on hospitality services.
Kampala has the biggest number of hotels standing at 24 per cent and regionally the Central region has about 28 per cent hotels, Western region 22 per cent, Eastern region 15 per cent and Northern region 11 per cent.