Only 12 percent stay open to be used for quarantine purposes
Following the spread of COVID -19 and the subsequent travel restrictions impacting the international travel-tour industry, 88 percent of hotels in Addis Ababa have decided to partially or fully close their doors due to low occupancy rates, according to Addis Ababa Hotel Owners’ Association (AHA).
A survey report released this week by the association stated that it found 56 percent of the 130 member hotels are fully closed, 32 percent are partially closed, and the rest 12 percent of the hotels are open being used for quarantine related purposes, especially for travelers returning or entering Ethiopia.
As the impact of the coronavirus increases daily, the report indicates that hotels in the capital are seeing a severe drop in occupancy rate and revenue. Occupancy is down to 2 percent across the city and a total of USD 35 million per month in revenue loss is expected.
With occupancy rate entering single digits, it will be impossible for hotels to cover their operational cost, let alone staff salaries. Unless owners inject capitals to shore-up their cash reserves, it will be extremely difficult for hotels to stay open, the report reads.
As the coronavirus case reported in Ethiopia increased, the hospitality sector was one that was impacted early-on, as containment measures introduced by governments resulted in a severe drop of tourism, conference, and business travelers, Benyam Bisrat, president of the AHA told The Reporter.
According to Benyam, the association is working closely with the government to ensure that the travel and tourism sector can withstand the prevailing crisis.
Indicating 82 percent of hotels are with heavy debt burden, the AHA also appealed for loan term modifications or deferred payments from financial institutions.
Hotel Owners with heavy debt burdens are now feeling the heat and realizing that the industry could fall into a tailspin, leading to a potential uptick in defaults. With empty hotel and depleted cash reserves, it will be difficult for hotels to pay their monthly debt, said the report.
“There is no job losses reported form our hotel members,” Benyam said when asked about hotel workers and possible lay-offs and cut-backs, adding, “While dealing with employment issues, we are consulting the hotels to follow the government’s COVID-19 workplace response guidelines and with sympathy to the workforce.
However, the report notes that the condition hotels are in is uncertain due to the unknown long-term effects of the State of Emergency and limited travel of consumers.
Given the rapid decline in occupancy rates and limited revenue streams for hotels, it is possible hotel managements might consider closing down hotels completely.
If the spread of the virus increases in the country we will mobilize hotel owners to support any effort to curb the outbreak, said Benyam. “In worst case scenarios we will provide hotel rooms to assist the fight against the virus,” said Benyam.
Contributed by Solomon Yimer