This archive report was first published on 18 June 2020.
As the COVID-19 pandemic continues to affect the world, Kenya's hotel industry is struggling to stay afloat. According to a recent survey conducted by the Central Bank, most hotels in Kenya have had all their bookings cancelled or suspended indefinitely.
Respondents from the survey pointed out that reopening the industry with curfews and lockdowns in place would not be cost-effective. In fact, out of the hotels that responded, 75 percent were in the process of reopening, 19 percent had reopened with zero forward bookings, and only 5 percent had forward bookings for the period.
Respondents from the overall tourism sector reported sharp reductions in international tourist arrivals in the first quarter of this year and projected the trend to remain for the rest of 2020. Domestic tourism had also come to a halt due to movement restrictions, further affecting hoteliers.
As a result, major hotels have temporarily closed down their businesses, with some opting to cut the number of employees or enforce measures such as slashing salaries of staff. The Treasury has acknowledged the impact of the pandemic on the industry and has allocated an additional Sh6 billion to the tourism and wildlife sectors to boost recovery efforts.
According to National Treasury Cabinet Secretary Ukur Yatani, the State Department of Tourism has received Sh12.8 billion for sector development and promotion, and another Sh10.8 billion for wildlife conservation and management. The 30 percent increase in allocation is part of the government's effort to cushion the sector, which is virtually on its knees.
“The tourism sector has been adversely hit by the coronavirus following cancellation of international flights, travel bans, and lockdown measures taken by countries,” said Yatani. “To jumpstart the sector, we are allocating funds for soft loans to hotels and related establishments and another Sh2 billion through the Tourism Finance Corporation.”
Additionally, Sh2 billion has been set aside to support the renovation of facilities and restructuring of business operations. The Central Bank of Kenya undertakes a Market Perceptions Survey every two months to obtain perceptions of banks and non-bank private sector firms on selected economic indicators.
