Hotel owners and tour operators are seeking government assistance to withstand the severe impacts of the COVID-19 outbreak which brought the hospitality industry to a standstill.
The hospitality industry players requested the government for a stimulus package that can help them rescue their businesses and retain their staff at these trying times. Travel restrictions, flight disruptions, social distancing and lockdown directives have brought down the local hospitality industry to its knees. Hotel occupancy rate in Addis Ababa and major regional towns has nosedived to almost zero. Hotel owners have sent out their staff members on paid leave.
In a meeting called by the Ministry of Finance and the Ministry of Culture and Tourism hotel owners and tour operator associations leaders’ pleaded the government to provide assistance to the hospitality industry which is on the brink of collapse. The consultative meeting co-chaired by Ahmed Shide, the Minister of Finance and Hirut Kassaw (PhD), Minister of Culture and Tourism was held last week. Feteh Woldesenbet, President of the Ethiopian Hotel and Related Service Provider Employers’ Federation, and Biniyam Bisrat, President of the Addis Ababa Hotel Owners Association made presentations.
The associations highlighted the major challenges the hotels are facing as a result of the global impacts of the COVID-19 outbreak that shocked the world. The associations disclosed that the hotels room occupancy rate is almost nil and their revenues have dwindled drastically. They requested the government to avail loans, postpone loan repayment and tax due dates in order to keep the hotels afloat. President of the Ethiopian Tour Operators Association, Yacob Melaku, stated that equal attention should be given to tour operators which are also at stake.
Ahmed Shide told the hotel owners and tour operators that the government understands the difficult situation that the hotel and tourism industry is traversing through. Ahmed said the government has limited resources adding that the hotel owners should not have high expectations. However, the minister said the government would try to do everything it can to assist the sector which is vital in bringing foreign currency and creating job opportunities.
Endegena Desalegn, Acting Communications Affairs Director with the Ministry of Culture and Tourism, told The Reporter that since the Ministry has realised the challenges facing the hotel and tourism industry it initiated consultative meetings a head of time. “We had organized a similar discussion in Hawassa earlier,” he said.
According to Endegena the hotels have released their employees on leave and there is a concern that they could start staff retrenchment program unless they get support from the government. In addition to salaries the hotels provide meals and other services to their employees.
Endegena said the hotels requested for bank loans, reschedule loan repayment period and tax relief. The ministers gave positive response to the demands. Ahmed Shide has assured the hotel owners that the government would provide assistance so that they would not lay off their employees. “We are now waiting for instructions from the Ministry of Finance and Ministry of Revenues,” Endegena said.
Feteh said the government officials understood the difficult situation that the hotel and tourism sector found itself in. “We had a fruitful discussion,” he told The Reporter.
Prime Minister Abiy Ahmed (PhD) last week announced a 15 billion birr stimulus package aimed at boosting the local economy. The fund would be dispersed through the commercial banks in the form of loan to manufacturing, horticulture and service sectors to be used to cover operational costs.
“We got a quick response from the government,” Feteh said. “We are now waiting for the implementation,” he added.
Kumneger Teketel, CEO and Lead Consultant at OZZIE Business and Hospitality Group Consultancy, commends the government’s initiative. However, Kumneger said the government should immediately inject the money to sustain the lives of the businesses. “The banks should start dispersing the money as soon as possible. At the same time due precaution should be taken to ensure the fund is not abused,” he added.
According to Kumneger it has been now a month since hotels became empty. “If the situation continues like this the hotels which relieved employees with paid leave would be compelled to lay them off,” he warned.
“The hotels are not making profits at this difficult time. They are having like one or two room guests. They are closing the idle building floors. So it would be commendable if the banks can relieve them of loan repayment this year, reduce interest and provide them with additional loan for operational cost,” he said. “It would be costly for the banks but it has to be done to sustain the businesses and avoid mass layoffs,” added.
The Addis Ababa Hotel Owners Association has written a letter to its members informing them of the government’s stimulus package and advised them to request loan from their banks. When the hotel owners approached the banks they were told that they did not yet get neither the finance nor a clear directive from the government.
There are more than 400 star-rated hotels in Ethiopia. The Addis Ababa Hotel Owners Association has 120 active members.