COAST IN ‘UNPRECEDENTED BUSINESS CRISIS’ SAYS SERENA IN PROFIT WARNING NOTICE
(Posted 18th February 2015)
‘The truth is finally coming home to roost’ commented a regular Nairobi based tourism source when passing information that TPS, the management company for Serena Hotels, yesterday formally issued a profit warning as is required for companies listed on the Nairobi Stock Exchange. ‘Our government lives in cuckoo land and our tourism board has been financially shackled and muted, they don’t dare to speak the truth any longer. The situation along the coast from Lamu to Malindi and all the way to Mombasa, Diani and the Tanzanian border is a catastrophe. How can one survive on 15 or 20 percent occupancy? Even the biggest are down to 50 percent or less and if Serena blows the whistle you know we are in dire straits. It is time for a fundamental change in our government set up when it comes to tourism. None of the key recommendations have been taken on board. We still have VAT on tourism services and yet the same government acknowledges that tourism is an invisible export. This is crazy. Not a single one of those fragmented parastatals has a board by the way which in any case is just job creation. Let them revisit that law and create a strong tourism authority which can deal with our problems. It has to be autonomous, raise funds through sustainable means and the private sector must be running it. What happened to that committee of various ministries the president promised? I am telling you that our sector is heading for collapse at the coast and our government stands by and watches and does nothing. We pick fights with Tanzania instead of sorting out our own problems first. Catastrophe in fact is an understatement, this stinks to heaven and looks like the people on top simply do not care for our sector any longer’.
Serena, arguably Eastern Africa’s best and for long most profitable hotel group with the widest portfolio covering all the East African countries plus Mozambique, has in the past managed to come through crisis’ with but a few scratches, proverbially speaking. This time however has the downturn not stopped at their doors, an indicator how fundamentally difficult the situation is today for the hospitality industry depending on tourist arrivals.
Serena in a public statement blamed, among other reasons, the Ebola hysteria as an added factor over and above security issues which prompted the toughest anti-travel advisories Kenya has ever seen published by Western countries.
Another regular source blamed industry leaders for not speaking up forcefully enough or as another one put it ‘bang fists on the desks when presenting yet another set of proposals how to get out of the crisis’.
Apart from VAT on tourism services had the present Kenyan government heaped VAT on new aircraft and aircraft spares, which would have drained national airline Kenya Airways of another 14+ billion Kenya Shillings, before the tax measure was eventually removed. ‘VAT on park fees raised the price of entry to parks and conservancies by 16 percent at a time when we were in full downturn mode already. No market can sustain price increases of such magnitude when numbers are in fact dropping. Prices have to be adjusted downwards to attract business, tariffs must be rebated not increased as Kenya did. And our Cabinet Secretary frankly lacks the steel in her back bone to stand up for the sector, we are beyond the point where a nice speech can make a difference. We need change!’ added another source, all by the way insisting vehemently not to be named for fear of repercussions.
While tourist charter flights from the traditional source markets into Mombasa have greatly reduced has the Kenyan government dilly dallied over giving traffic rights to foreign airlines’. Flights by scheduled airlines directly into Mombasa is presently only possible by RwandAir from Kigali, Turkish Airlines from Istanbul via Kilimanjaro and Ethiopian Airlines via Addis Ababa, while Qatar Airways is still waiting to have their landing rights granted, several years after first applying.
‘How come that Fly Dubai goes daily to Dar and several times a week to Zanzibar? How come that Mango flies twice a week scheduled services from Johannesburg to Zanzibar and yet Mombasa goes empty? Thousands of beds are empty, thousands of jobs have been lost and yet the key issue of air access remains our biggest problem? Mauritius gets a million visitors, all by scheduled flights, Seychelles get 250.000 visitors all by scheduled flights. We really need to change the way we do business’ added yet another when asked to share some thoughts.
Details on Serena Hotels’ final results for the 2014 financial year will be shared just as soon as they are available. Financial analysts expect that the immediate result for the TPS share prices will be a drop in value though there is no uniform prediction right now by how much the shares might come down.
It appears clear that the situation may get worse still before getting better again and a fact finding mission in March will allow to speak to key hoteliers one on one to hear what solutions they think are needed to kickstart coast tourism, which once upon a time was the bread and butter business for Kenya’s tourism industry.
For more information about Kenya’s attractions click on www.magicalkenya.com or www.kws.go.ke
