Kenya’s hotel sector has been battered by coronavirus Central bank of Kenya (CBK) July survey reveals. The hospitality industry recorded a remarkable decrease in the average hotel occupancy and forward booking from April to July compared to a similar period last year.
Large hotel chains had only a few (1 or 2) outlets opened while they awaited the resumption of international flights.
The July MPC survey sought perceptions on the effects of the pandemic on the economy, economic conditions prevailing in May and June and the market expectations on economic conditions for July and August 2020, for the next 12 months (July 2020 to June 2021), and over the medium term (over 5 years).
The survey coincided with the easing of movement restrictions in and out of Nairobi and Mombasa. There was optimism that the easing of movement will improve activity in the transport and hotels and restaurants sectors. Survey respondents also reported a pick-up in industrial activity and an upswing in imports.
Banking sector respondents reported subdued economic activity during the two months characterized by business closures, paralysis of transport to and from main cities, increased unemployment, reduced household and business spending and low access to credit.
Banks and non-bank firms have revised their economic growth expectations for 2020. Banks expect the full impact of the pandemic to be felt in the second and third quarter with the second quarter being the hardest hit.
Banking respondents remained worried about the measures still in place to control the spread of the pandemic, the uncertainty due to rising infections, low access to credit, and the channelling of resources to the health sector at the expense of other sectors. In addition, there is an expectation of a decline in demand due to lost incomes and the closed education sector that will hinder a strong rebound of activity.
On the other hand, non-bank private firms indicated that reduced corporate spending, most institutions operating below optimal levels, increase in fuel costs, and caution in spending as risks to a stronger recovery.