Top hotels rack up Sh1 billion in unpaid loans
By Otiato Guguyu | May 2nd 2017
Top hotels were unable to pay up loans worth Sh1.1 billion between October and December last year as tourist numbers fell in the third quarter.
According to the latest Central Bank of Kenya (CBK) figures, tourist arrivals in the fourth quarter of 2016 decreased by 16.7 per cent compared to the third quarter, which had seen Kenya host a number of high-profile international conferences.
“Tourism, restaurant and hotels sector recorded the highest increase in NPLs (Non-Performing Loans) in the fourth quarter of 2016 at 32.2 per cent or Sh1.1 billion. This is mainly attributable to business cash flow challenges due to low business sales/turnovers,” said CBK in its quarterly report.
According to the 2016 Economic Survey, the third quarter of last year saw significant growth in tourist numbers, which was not repeated towards the end of the year, leaving hotels without a much-needed foothold.
“The growth in international arrivals was more pronounced in the third quarter, expanding from 322,001 in third quarter of 2015 to 384,006 over the same period in 2016,” said the report.
“This may be attributed to the country hosting a number of high-profile international conferences, including the 14th session of the United Nations Conference on Trade and Development (UNCTAD 14) and the sixth Tokyo International Conference on African Development (TICAD VI).”
However, compared to the fourth quarter of 2015, tourist arrivals increased by 13.7 per cent in the fourth quarter of last year, which points to continued recovery of the tourism sector. Monthly data on overall tourist arrivals shows an increase of 12.5 per cent in December, which was reflected in the major points of entry - Nairobi’s Jomo Kenyatta International Airport (JKIA), which recorded a 10.4 per cent increase while Mombasa’s Moi International Airport recorded a significant increase of 28.5 per cent. The number of tourist arrivals went up from 1.2 million in 2015 to 1.34 million in 2016, with earnings from the tourism sector improving by 17.8 per cent from Sh84.6 billion in 2015 to Sh99.7 billion last year.
The number of visitor arrivals on holiday accounted for 71.9 per cent of all international arrivals followed by business at 13.4 per cent.
The slowing down of tourist arrivals at the end of last year may, however, stretch into this year, with political apprehension expected to keep international tourists at bay.
Local tourism, which has also been supported by county governments, is also expected to slow down due to the transition period as new governments are elected into office.
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