Hotel sector suffers losses amid coronavirus pandemic

Hotel occupancy in the country has slumped drastically following the global coronavirus pandemic.

Hotel proprietors yesterday said the occupancy rates had dropped to as low as five per cent, noting that if the situation continues for two more months, they will lay off staff or close business.

Since the beginning of this month, players in the tourism sector said they have been dealing with cancellation of bookings and refunds.

Mr Amos Wekesa, the chief executive officer of Uganda Lodges and Great Lakes Safaris, said his company has so far received more than 2,500 cancellations.

“Right now all reservations for the lodges are only answering to cancellations and refund. By Friday last week, we had 2,500 cancellations as Uganda lodges. Nine out of 10 emails coming in are cancellations and that is happening across the board,” Mr Wekesa said.

He said Uganda would not be hugely affected if the citizens owned the economy and challenged Ugandans to think of investing in banking, telecoms and other sectors to sustain the economy.

“Much as we are blocking entry because of coronavirus, the foreigners are earning from us. If you are a Ugandan and go to Shell, a Dutch is earning, if you use MTN and Stanbic Bank, a South African is earning, if you go to Total, a French is earning. It means that we actually do not own this economy. If the banks belonged to us, we would not be having these challenges. If we don’t own these businesses, then we don’t own the economy,” he said.

At Serena Hotel, the situation is not different. Mr Anthony Chege, the hotel’s general manager, said the hotel had already seen cancellations worth $700,000 (Shs2.6b) for Kampala Serena and about $400,000 (Shs1.4b) for its Kigo branch.

Mr Chege said as foreign guests disappear, Ugandans should step in to fill the gap.

Incentives
The hotel is offering $240 (about (Shs898,000) inclusive of lunch or dinner per night or $182 (about Shs680,000) per night for single inclusive of lunch or dinner, down from the normal $282 (about Shs1.05m) for a double bed.
“We have created special rates for residents and for Easter and we would want that they take advantage of these rates.

We can also assure them that we are doing our very best to step up our hygiene and make sure that we do not expose them to any infections in the event that we get this virus here,” Mr Chege said.

His Sheraton Hotel counterpart, Mr Jean Phillippe Bittencourt, said the figures were worrying.

“Our estimated amount of loss in terms of revenue for March and April in terms of cancellation is around $700,000. This is something we have never faced before.

Most events have been postponed. We have drastic reduction of our business, our occupancy rate for the month of March shall end at around 24-25 per cent,” Mr Bittencourt said.

“As of this week, we already feel the major decrease and we are running at 12-15 per cent and that situation will move into April where as of today we have less than 5 per cent booking,” he added.

Mr Bittencourt said as a cost-cutting measure, they are asking staff with accumulated leave to take it, and shutting down some floors.

Mr Haruna Kibirige Kalule, the managing director of Hotel Africana, said their occupancy rate has reduced from reduced from more than 75 per cent to 25 per cent.

“That means that we cannot pay salaries, utilities and other expenses. We want government to come to our rescue. Hotel is not like other industries that you can close. You still have to light it even if you have one guest,” he said.

Managers say they are faced with laying off some of their employees if the situation does not improve.
Mr Bittencourt said they have invested a lot in training their staff to international standards and sacking them would not be the best option.

“Our people are our priority because we invest a lot in training and we prepare them for being at the level of our standards and if anything has to be decided, it will be in a straight and fair way. If the situation gets worse, everybody will have to do a little bit of sacrifice. But we will try to minimise the impact, especially for our people that have their families and their obligations and we hope that it will be short,” he said.

Mr Chege said they plan to hang on to their top staff to ensure continuity.

“We do not plan on laying off workers, but the biggest challenge we have is we are uncertain, we don’t know for how long this situation will continue and that’s something we really need to perhaps understand. You cannot prepare for this because if we knew that it was ending next month, then you can have plan for it,” he said.

Mr Wekesa said government should offer the sector a relief from statutory payments to keep their employees.

“Why should I keep paying 50 per cent to staff who are Ugandans and yet you expect me to pay PAYE, NSSF, withholding taxes and the rest, which government should actually waive. We are not saying government should bail us, we are ready to take on our burdens, but we are asking it to relieve us of the taxes for maybe five or eight months depending on for how long this problem will continue,” he said.

Ms Susan Muhwezi, the chairperson of Uganda Hotel Owners Association, said some hotels have already laid of staff.

Some smaller hotels like mine in Mbarara have already reduced their staff numbers. Although we are still talking about stock of numbers of cancellation and their resultant financial implications, it is without a doubt that the tourism industry is taking a big financial hit because of this pandemic,” she said.

Ms Muhwezi urged government to offer tax reliefs and other incentives so that hotels stay afloat.

Capacity

In the financial year 2018/2019, tourist arrivals grew by 7.4 per cent from 1,402 million in 2017 to 1,505 million, according to figures from Uganda Tourism Board.

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