Five ways coronavirus might affect the hotel industry in Kenya

By Charles Bazenga | Monday, Mar 16th 2020 at 11:58
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The whole world is grappling with a pandemic that is spreading like bush fire- the novel Corona Virus also referred to as Covid-19. Its cure hasn't been invented. Hitherto, there have been more than 160,000 cases of infections, more than 6,000 deaths, and more than 75,000 recoveries across the globe.

All seven continents have been affected with Africa and Kenya, in particular, being in the list of the most recently hit areas. The suspected cases in Kenya have been put under quarantine. The Government, through the Ministry of Health, is doing the best to sensitize Kenyans and to inform them about emerging/suspected cases.

Tourism in Kenya, particularly the hotel industry, has been hit the most owing to lockdowns and travel advisories in nearly all parts of the world that have led to cancellations of bookings/reservations. This has sent stakeholders back to the drawing board to come up with strategies to deal with the deadly. Below is how the hotel industry in Kenya has been affected;

1. Low Business Volume

Owing to booking cancellations, Hotels will suffer low occupancy resulting in dismal accommodation revenue. Due to the virus scare, the majority of Kenyans have shied away from eating out, drinking out, and attending conferences. These are key revenue centres in a hotel setup; their lack of utilisation will lead to little or no revenue. Many hotels, restaurants, pubs, cafes, meeting centres have been deserted.

2. Downsizing- loss of jobs

As a result of low occupancies, one of the obvious decisions by management of hotels will be to lay off casual workers and to suspend the renewal of contracts expiring during this period. Loss of jobs will affect families directly as the breadwinners are sent parking.

 

3. Financial losses

Fixed costs, e.g., rent, electricity, insurance, internet, marketing/advertising costs, will majorly affect hotels' bottom line negatively. The below-average revenues of many hotels will be exceeded by the expenditure.

 

4. Unpaid creditors

With insufficient cashflow, hotels will not be able to meet their financial obligations, especially creditors, among other things. This will directly have a negative impact on the creditors' businesses and an indirect impact on other parties, depending on the creditors.

 

5. Wastage/spoilage

In as much as Kenya was alert and ready to employ recommended global measures of dealing with the pandemic in the eventuality it hits her, nobody expected the virus to catch up with us this soon. Procurement of edibles, perishables, among other delicate foodstuffs, had taken place with the hope of selling them to a projected number of customers. The low business volumes will lead to spoilage of perishables and other food items that cannot be preserved.

In conclusion, businesses have been hit hard. This will have a major impact on the economy. Hotels must train their staff on the virus- how it spreads and how spreading can be curbed. The use of disinfectants during cleaning is of the essence. Provision of enough clean water, soap and sanitizer for staff and guests is paramount to fighting the pandemic. If the Covid-19 pandemic is not urgently resolved, there will be more loss of lives, businesses, and jobs. Hopefully, the pandemic will be resolved soonest possible.

 

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