116-year-old hotel closes as coronavirus pummels iconic brands

The Norfolk hotel in Nairobi. [Courtesy]

Fairmont The Norfolk’s new owners from Nepal, South Asia, could never have made the acquisition at a worse time.

Within months of acquiring the iconic hotel in central Nairobi and the world-famous Mara Safari Club, CG Hospitality part of the Chaudhary Group, made the call.

It was a call to indefinitely shut the operations of the two facilities, after being suffocated by Covid-19 and the attendant travel restrictions which have meant zero tourists.

Government guidelines on social distancing have ensured that events such as meetings have moved into the digital sphere, sucking the life out of The Norfolk and hundreds of other hotels.

Other hotel facilities under the Fairmont Hotels and Resorts stable, including Mt Kenya Safari Club, which is associated with billionaire Humphrey Kariuki, are yet to announce such drastic measures.

The Nepalese’s decision, which involved sending all workers home, could suggest there is little prospect, at least from the owners’ perspective of matters going back to the better days, before the coronavirus outbreak.

It is, however, unlikely that the history of the hotel would be wiped out by completely closing down the business, but rather the new owners could use the break to start all over again.

But for Norfolk, which opened its doors to visitors in 1904, and only suspended operations in 1981 following a bomb attack which claimed 20 lives, its story is every inch that of Nairobi.

Theodore Roosevelt, the 26th president of the United States stayed at the hotel after his retirement in 1909.

Closure of The Norfolk is the clearest pointer to the struggles the hospitality industry is facing as other major brands are also suffering from lack of business.

Nairobi and other major urban areas are turning into ghost towns as night clubs that defined the way of life for many having closed.

The cheer that characterised Nairobi’s nightlife has been silenced by a dusk-to-dawn curfew, driving the final nail in the coffins of entertainment spots after directives on social distancing were issued.

Border restrictions

Businesses that connect Kenya to the world were the first to be hit by the cessation of movement and curfew as border restrictions and quarantines became the norm following the country’s first confirmed Covid-19 on March 13.

All eyes are on President Uhuru Kenyatta who is expected to announce relaxed rules that are aimed at reopening the economy and give a new lease of life to the affected sectors.

Stringent social distance rules have devastated the beer industry. East African Breweries Limited (EABL) has seen some of its prominent brands get a drubbing. Guinness has disappeared from the market as pubs remain shut and production of the stout is reduced.

Another brewer, Keroche Breweries, smarting from a bruising tax battle with the Kenya Revenue Authority, is also counting losses. The Naivasha-based brewer was forced to close its brewery. As a result, Summit Beer, their premium brand, is no longer available.

Mater Hospital, another big brand in the healthcare sector, reduced its employees’ salaries for four months after patients suddenly disappeared from hospitals. The management blamed the decision on the Covid-19 pandemic.

“All staff will, unfortunately, take a pay cut in June, July, August and September in a graduated scale according to their pay. Details will be communicated in the individual letters,” read a statement by Mater Hospital’s CEO, Prof Dominic Mwenja.

It is unclear, if, under the revised guidelines, the aviation sector would be reopened seeing that other countries that would be source markets for visitors are still reporting high disease cases and deaths.

In comparison, Kenya has reported far fewer numbers in infections and deaths, which only surpassed the 60-mark last Friday.

Continued closure of the aviation sector would sound the death knell for Kenya Airways (KQ) whose planes have remained on the ground for more than two months.

KQ is a brand that may have long seen its worst days considering its financial struggles even before Covid-19 broke out to devastate the world.

In the last financial year, the firm bled nearly Sh13 billion on account of huge costs including cash spent on paying for aircraft leases.

Incidentally, the same aircraft ownership costs still apply even though the equipment is idle with indications that the State is reluctant to offer a bailout to meet basic expenses such as salaries.

Without a government bailout, KQ’s rescue would be impossible as other investors in the majority-State owned enterprise through a rights issue is hugely unlikely.

Globally, other airlines have endured comparable pains with fears that the Covid-19 situation could have permanent implications for the travel industry where the American billionaire Warren Buffet chose to exit in May.

Similarly, South Africa has given up on its airline and announced that it would not offer any support for the sinking government-owned firm which has been placed under administration.

Virgin Atlantic, which is owned by British billionaire Richard Branson, has been hurt in its Australia operations where the subsidiary has filed for bankruptcy protection after entering administration and laid off over 3,000 workers.

It is saddled with a Sh700 billion debt with prospects that any buyer would likely sell off the planes to mark the end of the brand.

Hertz, the car-rental company founded over a century ago, has recently filed for bankruptcy protection in the US, emerging as one of the companies to go under after coronavirus cut demand for car leases.

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