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BusinessLocal hospitality loses 50 percent market to COVID-19

Local hospitality loses 50 percent market to COVID-19

Hotel occupancy rate nose dives by 50 percent

The local hotel and tourism industry is hard hit by the spread of the coronavirus (CIVID-19) to Ethiopia.

The sharp decline in travel and cancellations of meetings and conferences led the hotels to lose up to fifty percent of their market, it was learnt. Hotel owners are now pleading with banks to reschedule loan repayment periods. They are also asking the Ministry of Revenue to give them time to pay manage their tax dues. 

Feteh Woldesenbet , President of the Ethiopian Hotel and Related Service Provider Employers’ Association, told The Reporter that the local hotel industry has lost 50 percent of its market in connection with the widespread Corona virus which brought down the hotel and travel industry to its knees. According to Feteh the coronavirus outbreak has slashed the hotel occupancy rate to 50 percent on average.

“The Ethiopian hospitality industry has been suffering from the impacts of the political instability in the past four years. Recently it was reviving and this year (Ethiopian 2012) it was performing but abruptly the Corona Virus outbreak occurred and devastated the sector. The hotel occupancy rate has nose dived to 50 percent. This is a big blow to the sector,” Feteh said.

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“The hotel and travel industry has direct relation with peace and stability,” he added.

At a national hotel and tourism conference held this week in Hawassa town industry players proposed to the government officials and bank executives that loan and tax payment periods should be rescheduled as the hotels are facing liquidity problem.

The tourist inflow has come to a standstill. Announcements by public health institutions prohibiting meetings and social events has aggravated the situation culminating in a loss of market       

Feteh said as the hotels are fast losing cash due to the sharp decline of leisure and conference related travels banks should consider to reschedule loan repayment period. He said it would also be commendable if the Ministry of Revenue could also give additional time to collect taxes from the hotels. “Otherwise the hotels would not be service their loans according to schedule and that would negatively impact the financial sector. There could also be massive lay offs which that would result in socio economic calamities,” Feteh said. 

 Feteh also said that since there is shortage of protective and sanitser materials the government should work closely with the hotel and tour associations to vail the materials. “The hotels are the first contact points after the airport so they are exposed to the pathogen. So if we do not provide them with the right protective materials they could be afraid to come to work.”

Kumneger Teketel, CEO and Lead Consultant OZZIE Business and Hospitality Group Consultancy, told The Reporter that the hotel business in general dropped by 30-50 percent due to the corona pandemic. Kumneger strongly advises hotels that they should work on cost reduction aggressively. “First the hotels should focus on their supply chain. They need to avoid stock. They should only buy essential stuff necessary for daily consumption. They should not have unnecessary stock,” Kumneger said.

He also said that the hotels should shut down some facilities. “If you have 100 guest rooms and you are able to sell only 15 rooms you have to shut down the unoccupied floors and send the employees on paid leave,” he said. “If a hotel has two bars it has to close one of them and keep the other one open. If you have two restaurants you have to close one of the restaurant and keep running only one. You should avid redundancy,” he said. 

According to Kumneger, the banks should advise the hotels on cost reduction strategy. “Other wise the hotels would default and the banks would foreclose the hotels and that would inflict harm on the hospitality industry.”

“This would eventually subside and the business would recover. We don’t have to panic and get frustrated. The international hotel chain investment would also pick up which is in a state of shock at the moment. What hotels should do right now is work on cost cutting strategy aggressively,” he said.

He also advised hotel and restaurant managers to train their staff on how to protect themselves and treat their guests professionally. “They should reported suspected cases to the concerned authorities and defend their country,” he added.

There are more than 400 star rated hotels in Ethiopia.       

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