Tourism will lose Sh72 billion due to the effects of the Covid-19 pandemic this year, a new government report says.
The industry which employs thousands has been hit hard by the pandemic, with National Treasury Cabinet Secretary Ukur Yatani saying hotels alone are expected suffer Sh56 billion losses.
Catering and other associated services will lose Sh16.2 billion, he added.
The associated services include parks, entertainment and tours and travel.
“A study commissioned by the Ministry of Tourism and Wildlife on the impact of Covid-19 estimates that the pandemic is likely to cost the industry a loss of $511 million in hotel revenue, $125 million in associated revenue and Sh2.5 billion for catering levy,” the Treasury said.
According to the “Post Covid-19 Economic Recovery Strategy 2020-2022” report by the Treasury, the losses are mainly due to the closure of international and local borders to contain the spread of the deadly virus.
A June report by the Tourism Ministry said an escalation in the crisis could see passenger volumes drop by 1.6 million, translating to Sh35 billion in losses.
So bad is the situation that the country recorded 3,101 tourist arrivals in April, compared to 146,258 visitors in the same month last year.
“Total arrivals as of April 2020 stood at 392,691, almost half the 619,698 recorded in the same period last year,” the Treasury report says.
It adds that the number of visitors to national parks dropped significantly, scaling down operations and resulting in a 90 per cent drop in revenue.
Jobs and livelihoods were lost as a result.
A significant number of employees in the industry have been made redundant, dismissed or taken pay cuts.
“Some 81.3 per cent of tourist establishments have reduced their employees while 85.5 per cent have effected pay cuts,” the study by the Ministry of Tourism says.
Drop in demand
The National Tourism Crisis Steering Committee said in its June report “Impact of Covid-19 on Tourism in Kenya, the Measures Taken and the Recovery pathways,” that a drop in demand led to the closing of many hotels.
“Though, the pandemic came during the low tourist season, hotels experienced an abrupt and unprecedented drop in demand. Consequently, some hotels have sent staff on paid and unpaid leave,” the report said.
Treasury said it would establish a Sh3 billion Stimulus Hotel Refurbishment Fund as a low-cost long-term credit scheme.