New hotels face hard times ahead of opening doors

Monday June 29 2020

hotel

Hotels continue to incur costs in staff salaries, maintenance of swimming pools, electricity and other expenditures. Photo | Cyril NDEGEYA  

MOSES K. GAHIGI
By MOSES K. GAHIGI
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Major hotel investors who were planning to join hospitality industry in the country now hangs in balance due to Covid19 disruptions that affected construction, with their peers already in the market look to the economic recovery fund to salvage their businesses.

This is partly because construction activities for major hotel brands including Ramada Hotel, New Sheraton, Kivu bay Rusizi, Uburanga Hotel boat, Marasa Umubano hotel, that were slated to make their entry into the market this year were disrupted due the coronavirus.

Now, investors have been forced back to the drawing board.

“Despite the partial easing of the lock-down, the situation for us is still unchanged, there plans to restart activities but with borders still closed, airlines still suspended and the 14 day quarantine, things are still on a standstill” said Nsengiyumva Barakabuye, chairperson of Rwanda Hoteliers’ Association (RHA).

Adding that the hotels under construction had to suspend works due to the hiccups in the access to materials and travel in Kigali and inter-province travels.

otel owners across the country are working in overdrive, as they prepare to fulfil all the necessary requirements to get a piece of the Rwf100billion economic recovery fund put up by government to offer relief to businesses critically affected by the pandemic.

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The facility, which could be increased to Rwf200 billion, will help struggling hotels cater for loan restructuring and provide working capital to take care of the fixed costs which includes maintenance, paying staff among other costs.

Sebacuruzi Evariste is the CEO of Great Seasons hotel in Nyarutarama, his hotel had a 9-year loan with BK worth Rwf1.3billion, and the hotel was working well and had been able to pay back Rwf700million, until the Covid19 pandemic broke out.

“Nothing is working anymore, we had 60 employees and we are now left with 10, we let others go, just like other hotels we have been seriously hit by the pandemic” said Sebacuruzi.

The hotel had a running contract with RwandAir, where they housed their passengers and hosted their meetings, but all this is in limbo because aircrafts are grounded.

When asked if they have already started the process of applying for the economic recovery fund put up by government, he said it is not even a good idea to get this loan given the situation, because it would be adding another burden to an already precarious situation.

“BK has reached out to us and asked us to write to them asking for the money, but I don’t even want to get that money, if I get let’s say Rwf400million, what am I going to use it for yet there are no customers, it would make sense if one gets the loan after planes have resumed,” said Sebacuruzi.

In March alone, 21 per cent of tourism and hospitality industry players lost up to Rwf40 billion in revenues, according to Rwanda Hoteliers Association.

By April, up to 25,900 employees in the tourism industry about 70 per cent of the sector’s workforce had been suspended.

Hotels continue to incur costs in staff salaries, maintenance of swimming pools, electricity and other expenditures meant to keep the hotels operational despite receiving no customers, but the facility will be more crucial in refinancing their existing loans.

The sector has lost up to 90 per cent of revenues due to cancellations of events and bookings due to global lockdown and travel restrictions.

Players worry that the industry will even suffer longer even after the pandemic has been subdued; because of the psychological toll it will have on tourists and MICE visitors especially from the Western countries.

In 2019, the service sector contributed 49.1 per cent to GDP, buoyed by transport services that grew by 15.4 per cent, the hotel industry that grew by 11.6 per cent.

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