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Covid offers perfect kick for businesses to think big

OPINION
By XN Iraki | July 13th 2021

Intercontinental hotel in Nairobi after it was shut down.[Elvis Ogina,Standard]

Some of the country’s best-known high-end hotels, including The Norfolk, Mayfair, Boulevard, Treetops, Intercontinental and Radisson Blu, have closed down over the last year.  

Before its closure at the height of the Covid-19 pandemic, Norfolk boasted a heritage of over 100 years, having gone through two world wars, the Great Depression, the Mau Mau uprising and four presidents.

Treetops in Nyeri County, for its part, hosted the future Queen of England. 

It is costly to build a hotel, more so when you can’t easily put it to another use. This is why we need to use wood in buildings to make them easy to repurpose or demolish.

Americans love wood. We love concrete despite our shorter life expectancy. Hotels are not just buildings; they also have a  labour force.

Add the perishability of food and sensitivity to the external environment. Hotels are a heavy investment with commensurate risks. 

Some argue hotels are not risky because food is a necessity. But we have alternatives like cooking at home. 

With such big hotels closing down, could we be tempted to think small to reduce exposure to unforeseen risks?

Would it be better to have a few small hotels instead of one big hotel? Let’s be fair to some hotels; they converted into apartments, which has paid off big in the wake of Covid-19. Big hotels miss the flexibility of small hotels or even kiosks. It’s hard to adjust the cost of power and other overheads. 

The workers must be paid, perhaps the biggest cost in the business. Closing down operations for the hotels has been a popular but risky option. Will their customers come back? Will they seek alternatives?  

It’s not just hotels that could make us think small, going forward. Private schools were affected too. Some closed indefinitely or converted into other businesses. Some have become hospitals, resorts, or shopping centres. Noted the numerous hospitals opening across the country? What will happen to them when Covid-19 runs its course? 

The new developments might force us to revise our risk appetite. Such new thinking or sentiments might have unintended consequences on economic growth. Growth is driven by faith in the future and the rewards that come with taking risks. Will covid-19 make us risk-averse? Some could argue that innovations could counterbalance our avoidance of risk.

But innovations are rare in the service industry like hospitality. Think of food itself. Beyond packaging, how else can we improve on food?

Ugali is ugali; it does not matter where it’s cooked or who cooks it. Sleeping in a hotel can’t be improved despite new linen or charging more. 

Some could argue that Covid-19 was A one-off disaster and should not shake our faith in the future. We could argue that human beings have a short memory, and with time we get used to a crisis. Noted how we have relaxed our protocols on Covid-19 after “getting used” to the pandemic?  

But our age matters. Think of the children who were out of school for nine months last year or the workers who have lost their jobs.

The impact could last for a long time and shared with the next generation. How else will stereotypes and jokes be preserved like Dundori natives checking the gender of cars? We have thought small for too long. Small and Medium Enterprises (SMEs) make a disproportionate number of key players in our economy. 

Few of the firms graduate to the medium category, with Africa suffering from the missing middle, unlike Germany whose medium-sized firms have gone on to conquer the world. Instead of thinking small, we should use Covid-19 as a wake-up call. We need to realise how much ground we must cover to catch up with the rest of the world.

How many of the Kenya indigenous hotels have a branch beyond the borders like Radisson or Hilton?

Our banks have gone beyond the borders into some African countries but not into the rest of the world. I want to find an Equity Bank or KCB branch in Shanghai, China and Vancouver in Canada.  

Covid-19 has devastated many businesses but given us a good chance for renewal and innovation, to think big, learn from our mistakes and compete with the rest of the world. 

Covid 19 Time Series

 

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