Bed occupancy rates and use of conference facilities hit highs in June and July last seen before the pandemic, the Central Bank of Kenya‘s (CBK) Monetary Policy Committee (MPC) hotel survey report shows.
In many places, the numbers dwarfed the pre-pandemic era.
However, hoteliers are concerned that a poorly managed election could hurt a sector enjoying such promising development.
There could also be major concerns, especially as the hospitality industry has been one of the worst hit by the pandemic, losing hefty revenues and jobs and limping towards stability for most of 2021.
According to the 2022 Business Survey, the hospitality industry benefited from the lifting of Covid-19 restrictions – both abroad and domestically in 2021.
“This resulted in a 52.5 percent growth in the hotel sector in 2021 compared to a 47.7 percent decline in 2020,” the CBK survey said.
“The sector was supported by improved international visitor arrivals, which increased by 50.3 percent from 579,600 visitors to 871,300 visitors in 2021.”
The survey sought information on the status and level of hotel operations, particularly occupancy rates of accommodation and restaurant services, changes in employment in the industry, changes in clientele composition during the post-pandemic period, expectations for a return to normal operations, and general sentiment in the industry
It was reported that the “economic environment” had favored the reopening of hotels that had been closed during the pandemic.
“On average, bed occupancy in Mombasa and Nairobi improved significantly in June due to better tourist arrivals and the economic environment. Most of these hotels reported full occupancy. However, hotels in the rest of the country reported lower activity in July as bed occupancy and conferencing services declined across the country as the new fiscal year began,” the report said.
“Conference facilities also enjoyed strong bookings due to ‘normal business cycles in conference services as corporate and government institutions ramped up their conferences and workshops towards the end of the fiscal year.’
But that doesn’t leave business people unconcerned. Lake Elementaita Mountain Lodge general manager Charles Muchangi says the campaign period could make or kill the industry.
“Poorly managed campaign and post-election processes could undo the industry’s past achievements. Hotels, restaurants, tour operators and airlines are sensitive to political processes, as political instability before, during and after an election can easily bring the hospitality industry to the brink of collapse. The hospitality industry undoubtedly depends on the political environment,” says Muchangi.
It’s not a far-fetched thought that the industry could be rocked by election-related tensions.
This could be a double whammy for the sector after the blow of Covid-19.
“Political activity often becomes dramatic and chaotic. They are characterized by stereotyping, hate speech and xenophobic attitudes. The fear, anxiety and panic associated with this are leading to a sharp drop in the number of international tourists,” Muchangi says.
“During this period, the tourism industry is dependent on local tourists. Local market movement is also limited and constrained due to perceived political flashpoints and hostilities within the country,” he says
Mr Muchangi fears that such instability could have long-term effects on the sector, including driving investors away.
“Because of speculation, investor confidence is dwindling. This is because potential investors in the hospitality industry fear losing their hard-earned investments as a result of the violent election aftermath. The fear of post-election unrest, looting and the violent removal of people is frightening. As a result, hospitality investment projects (new hotels, airlines, tour operators, acquisitions, mergers) are on hold. This is a blow to an industry that has great potential and constantly yearns to grow and expand. This has a negative impact on the potential creation of jobs and business opportunities,” he says.
However, tourists could be confident that the country will remain stable as the CBK survey shows that advance bookings have increased even as the number of foreign customers rises to pre-Covid-19 levels, which is “improving significantly, especially for Mombasa”.
“The majority of hotels in Nairobi and the rest of the country reported improved bookings and numbers will continue to improve given their high reliance on walk-in customers and last minute bookings. Advance hotel bookings for the August-November 2022 period are particularly strong in Mombasa and Nairobi, indicating a recovery in demand. The majority of hotels surveyed expect the sector to recover to pre-Covid-19 operating levels by the end of the year,” MPC says.
Mr Muchangi says everything must be done to protect the industry. He hopes there will be no post-election destabilization to keep the industry dynamic.
“A well-cushioned hospitality industry is the permanent solution to the industry’s elusive sustainability. Adequate safety precautions must be taken as a prerequisite for the growth of the industry,” he says.