Africa’s hotels, tour operators and airlines are all reeling from the impact of coronavirus. The African Business Magazine’s Liam Taylor surveys the situation
The Serena Hotel in Kampala, the Ugandan capital, is a luxurious complex of conference facilities, fine dining spaces and landscaped gardens.
In normal times Geoffrey Ssejongo, a waiter, would be serving dinner to business people and tourists in one of the Serena’s gleaming restaurants.
But in April he was sitting at home, fretful for the future, as Uganda went into lockdown to contain the spread of coronavirus. He has lost income from tips, and worries he may lose his salary too if the crisis continues.
“Life at home becomes so difficult because your family have to look at you and they expect something from you,” he says. “It causes a terrible stress.”
“The collapse of the travel and tourism industry – from airlines to safari guides – could be catastrophic for African economies”
April was due to be a busy month for Uganda’s high-end hotels as the country prepared to host heads of state for the G-77 summit – a meeting that like so many others was cancelled.
The Serena was expecting 85% occupancy, says Anthony Chege, its general manager. Instead he and his team are scrambling to revise contracts with suppliers, from rubbish collectors to software services, as all of the hotel’s rooms lie empty.
“The revenue lost by the industry and the economy as a whole is massive,” says Chege. “The only control we have now is on costs.”
The collapse of the travel and tourism industry – from airlines to safari guides – could be catastrophic for African economies. The World Travel and Tourism Council (WTTC), an industry association, estimates that tourism and its associated activities generate about 9% of the continent’s income. The sector employs 10million Africans directly, and perhaps 14milion more jobs are created by its knock-on impacts.
Tourism is also a major foreign exchange earner. It brings in more dollars than coffee sales in Uganda. In Ethiopia tourist receipts account for nearly half of total exports. Cyril Ramaphosa, the South African president, has called tourism the “new gold”.
But by the start of April, coronavirus had shut down most of Africa’s tourist attractions. The cable cars hung motionless on Table Mountain. The deserted pyramids of Egypt were lit up at night with a message telling people to “stay home, stay safe”. Gorilla trekking in Central Africa was suspended for fear that the apes themselves could catch the virus.
“We can no longer put up pictures of how great South Africa is,” says Sisa Ntshona, the chief executive of South African Tourism, which promotes the country. “In fact we’re telling people not to visit.”
The tourism industry has weathered past crises from Ebola to terrorism, adds Mohammed Hersi, the chairman of the Kenya Tourism Federation and operations director at Pollman’s Tours and Safaris. But those were localised troubles. Now, “the whole world is coming to a stop.”
In late January a Taiwanese-American woman took a cruise up the Nile to Luxor, the site of the ancient Egyptian city of Thebes. She was later discovered to have the new coronavirus. By March a dozen crew members were infected and hundreds of passengers from all over the world had been put at risk.
International travel brought the virus to Africa, with most imported cases coming from Europe. The first person to die of Covid-19 in Egypt was a German tourist at a Red Sea resort. Tunisia and Mauritania both deported groups of Italian visitors who refused to be quarantined.
Tourist numbers had already started dropping as the virus spread to other continents. Now governments started shutting down travel altogether. By April around 20 African countries had closed their borders.
The United Nations World Tourism Organisation (UNWTO) has forecast a 20-30% drop in international tourist arrivals worldwide as a result of the pandemic. The impact in Africa, which relies heavily on long-haul traffic, could be even greater. A survey of 443 safari tour operators by SafariBookings.com, an online marketplace, finds that 93% have lost at least three-quarters of their bookings to the coronavirus outbreak, and almost all have seen a surge in cancellations.
Many countries have also imposed partial lockdowns, destroying domestic business travel as well as leisure tourism.
In Uganda, “the only hotels with guests are the ones that were designated as quarantine centres,” says Jean Byamugisha, executive director of the Uganda Hotel Owners Association.
Hotels typically need 40% occupancy to break even, she adds, and many “cannot meet their financial obligations like paying taxes and servicing their loans.”
“The whole industry is on its knees,” adds Carmen Nibigira, a tourism policy analyst based in Rwanda. “When you look at the east Africa region there are not many larger companies which are really dominating our sector. We still have thousands and thousands of independent business owners out there fighting and trying to survive.”
In effect, she says, many of those small businesses are “already buried” by the pandemic. “Those are the frontlines of our industry,” she adds. “They are not the Marriott. They are maybe working from home, an Air B&B, a guesthouse.”
Businesses of all sizes have plunged into survival mode. With no revenues coming in, their future depends on how much they can reduce their costs, how much cash they hold, and whether they can access finance.
An empty hotel does not need to pay for food or room cleaning, says Hersi of the Kenya Tourism Federation. But it still has to pay salaries and fixed costs such as maintenance and electricity bills, while servicing bank loans at double-digit interest rates. Hotels have been slashing pay – in some cases by 30-50%, says Hersi – and encouraging staff to bring forward unused annual leave, but lay-offs are inevitable.
The impact on workers extends to the loss of tips, points out Stephen Mugole, general secretary of HTS-Union in Uganda, which has members in the tourism, hospitality and retail sectors. In normal times, he estimates, service charges are about 40% of a worker’s typical take-home pay.
As for tour operators, they typically pay up-front for trekking permits and entrance to national parks. In some countries they are struggling to recoup those costs from government wildlife agencies even as they are refunding cancelled bookings.