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Kampala hotels most expensive in East Africa

High financing costs

Jean Byamugisha, the executive director of the Uganda Hotel Owners’ Association (UHOA), says the high cost of accommodation in Uganda is a big challenge and is attributed to high overhead costs amidst low number of quests/travelers.

“Most hotels are built using very high interest rate loans that must be paid back,” she told The Independent, “These push the price of the rooms up for the hotel to meet some of its financial obligations.”

She says for a hotel to break-even in Uganda, it must operate with at least 40% occupancy yet more than 70% of the hotels across the country are operating below the required threshold.

The tourism ministry puts room occupancy at 46.7% in the financial year 2015/16 compared with 48.2% in the previous year.

The low occupancy rates reflect the low tourist numbers. Data from the tourism ministry shows that Uganda’s international arrivals at Entebbe International Airport were 1.3 million, 60% (780,000) of who are considered tourists, which is a marginal 3.2% growth in arrivals compared to double digit growth in other East African countries.  Efforts to promote domestic tourism that will hopefully stir locals to use the country’s hotels are also yet to pick up.

On the other hand, the international arrivals in Kenya increased by 16.7% to 877,602, from January to December in 2016. In addition, domestic tourism grew by 14.6 % to 3.6 million last year compared with the same period in the previous year.

Tanzania’s tourism sector recorded an increase in tourist arrivals by 10.4% to 1.02 million tourists from January to October 2016 compared with the same period in the previous year. The country is looking at doubling its tourist numbers this year as it lays emphasis to boost domestic tourism.

Going forward, Baguma says the government needs to encourage investors to set up high-end facilities to drive the costs of accommodation downwards.

 Louis Badea, the manager for Jumia Uganda, an online travel booking platform told The Independent that there is need for hotels to create an East African resident and Ugandan citizen rates.

This he, says, will encourage local population to hold meeting and have accommodation in the available hotels.

Having half board and full board rates will also allow accommodation facilities to be flexible and target all tourists’ needs,” Badea said.

Marketing is one of the most difficult and biggest challenges of the hotels. Marketing is very expensive and yet it’s the only way the people can know what the industry has on offer,” Byamugisha added.

She said vigorous marketing campaign will lead to a rise in the number of travelers and quests and ultimately lead to a decline in costs of accommodation due to competition.


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