The 2 lake-side hotels, sit side by side on 90-acres by Lake Victoria and combined, do consist of 477 rooms, 20 conference rooms, 3 ballrooms and several outdoor facilities that can host up to 5,000 guests at ago.
In an interview with CEO East Africa, Dr. Sudhir Ruparelia, the founder and Chairman of the Group that is also the largest hotel chain in Uganda, said that two other hotels, Dolphin Suites in Bugolobi and Forest Cottages in Naguru, would also be closed.
“It is really bad. We have decided to close Speke Resort and the Commonwealth Resort. We will reopen once corona issues sorted out,” he said adding: “For the others like Kabira Country Club, only a small section will remain open,” he said on phone.
The Group also owns a portfolio of other luxury and budget hospitality facilities that include: Speke Hotel, Speke Apartments Wampewo, and Speke Apartments Kitante.
Dr. Sudhir said that combined, the Ruparelia GRoup which employed up to 8,000 workers has already sent home 1,000 workers and 2,000 will follow over the next few days.
In August 2019, the Group broke ground for the construction of 269 serviced and fully furnished 1, 2 &3 bedroom apartments on Old Kira Road, just next to Kabira Country Club. The Group is also in advanced plans to construct a 5-star Speke Resort and Convention Centre, in Entebbe. Dr. Sudhir however did not say if these plans would be halted.
CEO East Africa yesterday reported that several other hotels are said to be in partial lockdown and others in the process of closure.
Patrick Bitature the proprietor of Protea Hotel by Marriott Kampala and Protea Hotel by Marriott Kampala Skyz- also told CEO East Africa that they are scaling down operations.
“We are trying to keep the hotels open but it’s hard to justify since the bookings have dropped substantially – as expected once they borders and airports were closed. We shall keep a skeleton staff and security,” he said.
Calls by the tourism industry for a stimulus package from government to shield the industry from heavy operating costs and expensive loans amidst canceled bookings and empty rooms are yet to be responded to by the government.
The tourism industry is Uganda’s largest forex earner. At USD1.6 billion, tourism earnings in FY18/19 were bigger than the export earnings of Uganda’s leading 17 agriculture exports combined!
Redefining the CFO Role in Oil and Gas: Inside How UNOC’s Emmanuel Mugagga Is Executing Strategy for National ImpactThe sector at the end of 2018, employed 667,600 people which constituted 6.7% of all total employment. Worth noting is that the hospitality sector contributes up to 90% of all the jobs in the tourism industry with 58% of all jobs going to women and 77% of jobs to the youth- (18-30 years).
It is also important to note 95% of the hotels are owned by the private sector and of these, 75% are owned by Ugandan private players, 13% by other African private players and 7% by other international players.
COVID-19 effects on tourism unprecedented and disastrous
Jean Bamugisha, the Uganda Hotel Owners Association (UHOA) boss, told CEO East Africa in an interview yesterday that “the effects of the coronavirus on the hotel industry in Uganda have been unprecedented. There was never any contingency measure for an event like this and the industry has taken a hit never before seen on any scale.”
“Our big five star hotels that usually operate at 90% occupancy are now at zero occupancy for the next foreseeable months. A hotel’s financial health can be gauged from its occupancy rates. Hotels make the majority of their money from accommodation. For a hotel to break even it must operate at 40% occupancy. For a hotel to operate at zero occupancy is a disaster because it means that even salaries cannot be paid let alone taxes and loans,” she said.
“All conferences and events like weddings have been canceled and now bars even the ones in hotels have been banned from operating. Short of saying the word, for the most part hotels are now on lockdown. Many hotels have requested their staff to consider taking leave with effect from the end of this month. Other hotels have negotiated a pay cut with their staff so as to keep the doors open for two more months. If the situation doesn’t turn around by then, we anticipate that the majority of our hotels will be out of business,” she says.
“Most important for us and priority right now is the hotel staff whose salaries must be paid for as long as we can so that they can also take care of their families. But the truth is with no business many hotels will have no choice but to make the hard decision to close the doors and this lose jobs,” she added.
The tourism industry on 17th March 2020 met Hon. Matia Kasaija, the minister of Finance and appealed for a stimulus package that among others includes: VAT relief for a minimum 12 months and the deferring of corporate tax payment for 2019 to the end of 2020 instead of mid financial year to allow the industry to use that cash flow to pay operating expenses. The tourism industry also wants a waiver of Pay As You Earn for a minimum of 12 months, saying this would allow them to keep thousands of jobs during the tough time and recovery phase.
They also requested the government to intervene through the Bank of Uganda by putting in place mitigating measures either by reducing the interest rates or extending a grace period to hoteliers, tour operators and other industry stakeholders who are affected and are unable to service their loans on time. They also asked for a government negotiated 40% reduction on electricity tariffs for Hotels.
The government is yet to formally respond.
