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.”
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 10m Africans directly, and perhaps 14m 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.”
Shutdown
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 front-lines of our industry,” she adds. “They are not the Marriott. They are maybe working from home, an Air B&B, a guesthouse.”
Disappearing demand
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.
Airlines under siege
Africa’s airlines also face tough choices. Many of them were already in bad shape before the pandemic. As airports shut down, air traffic has been reduced to cargo transport and occasional repatriation flights. The number of scheduled seats on flights to and from African countries fell by 70% in the four weeks to 6 April, according to OAG, which collects flight data.
There has been a “complete disappearance of demand,” says Raphael Kuuchi, vice-president for Africa at the International Air Transport Association (IATA), an industry body. Its economists expect airline revenue in the region to drop by $6bn this year, with passenger numbers cut in half.
Airlines are in discussion with insurers, creditors and lessors to delay or reduce payments, Kuuchi adds. They are also asking governments for support such as loans, guarantees and tax relief. The median African airline had only about two months of cash and equivalents at the start of this year, which may run out before the recovery arrives.
South African Airways, which was already severely financially troubled, is lurching towards liquidation after the government refused to give it any further funding. Struggling Kenya Airways is seeking a bailout and even Ethiopian Airlines, one of the region’s best-run carriers, lost $550m to coronavirus in the first three months of the year.
“Depending on what level of support we get from governments, some airlines might not come back after this pandemic,” says Kuuchi.
Africa World Airlines (AWA), a private carrier headquartered in Accra, is better placed than most. It has few debts and has been planning for coronavirus since January, with advice from its Chinese shareholder HNA Group, which also owns Hainan Airlines.
“The real challenge is not right now in a shutdown period but it’s going to be when operations restart,” says Sean Mendis, AWA’s chief operations officer. “Right now you’re not burning money on direct operating costs. But when things restart it will be a slow growth. We’ll be flying planes 20-30% full initially. And then you’ll be incurring full costs as well as having significantly reduced revenue.”
Pressing the reset button
By mid-April few African governments had offered targeted support to the tourism sector, though several had offered general packages of tax relief. Meanwhile tourist businesses were trying to plan for the future without knowing when lockdowns would end and travel restrictions ease.
“The worst of it is the uncertainty,” says Oscar Plans of Wildplaces, which runs three safari lodges in Uganda. “If we knew this was a two-month thing then we could sit in a cave and wait for the storm to pass. But there’s only so long you can wait.”
Wildplaces is allowing customers to postpone into the high season, which runs from June to September. It has frozen rates for 2021.
Even after the pandemic is over, the recovery will take time. A safari is “a bucket list trip”, says Jan Beekwilder of SafariBookings.com – the sort of experience that many Western travellers will put off until more stable times. Immediate hopes lie with a resurgence in domestic tourism and business travel.
“We’re pressing the reset button,” says Ntshona of South African Tourism. That might mean overhauling data systems, reconsidering policy or putting new emphasis on domestic travellers. “This is the perfect time to do all the spadework that we have not done previously. We have sat on decisions without implementing them. Well guess what? Now we don’t have a choice.”
That view is shared by Mariam Nezar and Laila Hassaballa, who run a small business called Bellies En-Route offering food tours of Cairo.
“On the one hand I’m obviously very anxious,” says Nezar. “But at the same time I feel like [the interruption] has been a blessing in disguise, because it pushed us into thinking outside the box, pulling out ideas that we’ve always had but never really had the time to focus on.”
Those ideas include a travel blog and a cookbook of traditional recipes. They also want to tap into the domestic market with tours taking Cairenes to other parts of Egypt.
Tom Katsyamira, who runs the Embassy Hotel in Mbarara, south-west Uganda, is also rethinking his strategy.
“I am looking at venturing into other areas,” he says. “For example outside catering, where you can go and offer services in somebody’s home when he has a small function. You can start baking – as we are closed down I see people are still eating bread!”
For tourist businesses everywhere, versatility and ingenuity will be essential in the uncertain months ahead.
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