More than 1 million livelihoods at risk as Kenya’s hospitality industry struggles
There is no question about it: Kenya’s hospitality industry — which includes the country’s lucrative tourism sector — is one of the biggest casualties of Covid-19. According to government estimates, the industry has lost an estimated KES 80 Billion (USD 800 million) since the onset of the pandemic.
To borrow some medical terms that we’ve become accustomed to in recent months, the sector is in an acute state. It is trying to breathe, yet there are not enough ventilators in sight. Ventilators that, incidentally, should have been made available by a government that cannot fully account for funds meant to counter the pandemic.
Try as they may, a majority of hotel and restaurant proprietors simply cannot stop the destructive effect that the pandemic is having on their establishments. Like distraught relatives watching their loved ones sink deeper into a coma, many owners can do nothing but watch as their investments waste away into an abyss that some, sadly, will never recover from. To add to the catastrophe, these collapsing establishments are set to take more than a million livelihoods with them.
A rising industry
The hospitality industry accounts for almost 10% of Kenya’s GDP, and has been growing at tremendous rates since 2016. In 2018, PricewaterhouseCoopers projected that up to 13 new hotels would be opened in the country by the end of 2022. For an industry that been experiencing negative growth for three consecutive years between 2013 and 2015, these projections signaled a welcome revival of the crucial tourism sector in particular.
Broadly speaking, there were two key drivers for this growth. Internally, there has been a steady cultural shift among Kenyans. Although a majority of tourists are still foreign, a rise in local tourism increased hotel bookings in top travel destinations especially at the Coast, and the Rift Valley region.
Within Nairobi, this cultural shift has contributed to displacement of clubs by various restaurant chains, due to increased appreciation of restaurant food among better-off urban residents. Hotels have also benefited immensely from an increase in conferences, primarily organised by county governments.
The main external driver of this expansion was the growth in tourist arrivals, mainly from the United States and Western Europe. In 2018, Kenya attracted more than 2 million international tourists for the first time. That milestone represented a leap of more than 37% from 2017 numbers and generated KES 157 billion in revenues.
Despite a slight slowdown in 2019, the industry was still on a positive trajectory, with a corresponding 3.9% increase in revenues by the end of 2019. Seizing these hopeful signs, the Cabinet Secretary for Tourism and Wildlife painted a beautiful picture of an industry set to grow in leaps and bounds. By some estimates, the industry was on the path to achieving an annual average growth rate of 6.5% over the next three years. But then, Covid-19 happened.
Large economic footprint
The Covid-19 pandemic is, without a doubt, the biggest disrupter to the industry in the past 13 years. Presently, Covid-19 infections have just exceeded 28,000 with 14,600 recoveries and 456 deaths. As these cases continue to rise, so do the levels of desperation due to the resulting disruption of livelihoods.
To understand the full extent of this blow, it is important to note that a boom in the hospitality industry benefits not only owners, but also the huge numbers of people employed across different categories, including chefs, waiters, cleaners, security personnel, interpreters, drivers, and tour guides.
As of 2018, the industry employed 1.1 million people, equivalent to almost 10% of Kenya’s formal workforce. This figure was over and above the thousands of casual workers who depend on these entities. As such, any disruptions in the sector present a formidable threat to the livelihoods of a large segment of Kenyans.
With their large economic footprint, hotels and restaurants are also key in sustaining the profitability of agricultural enterprises. They provide a ready market for produce across multiple crop and livestock value chains. By buying such produce in bulk, they offer a crucial source of predictable income not only for farmers, but also for suppliers of various processed products including flour, food additives, and beverages.
Counting their losses
Hotels and restaurants were among the set of establishments to be negatively affected when the government started enforcing Covid-19 social distancing rules, as well as evening curfews. Planned events, including local and international conferences which are important sources of business for the industry, had to be cancelled in line with health regulations.
These restrictions were closely followed by the ban on international flights, just as players in the tourism sector were preparing for the June-September peak season. With a significant drop in restaurant orders, as well as hotel occupancy rates, many establishments are struggling to stay afloat.
Some reopened following the easing of lock-down restrictions in July, albeit with a leaner workforce, and substantially scaled down operations. A significant portion has closed shop altogether. Each closure, whether temporary or permanent, negatively impacts the livelihoods of those who depend on the hospitality industry.
A market survey carried out by the Central Bank of Kenya in April revealed that a shocking 90% of employees in hotels had been laid off. Whereas some sent staff on indefinite unpaid leave, others, such as the Fairmont Norfolk fired all its employees. Affected individuals have now joined another one million newly jobless Kenyans.
These statistics indicate that the hospitality industry alone is responsible for about half of all reported job losses linked to the pandemic, with the Kenya National Bureau of Statistics reporting that 90% of fired staff are uncertain of whether they will ever return to work.
From the graph above, labor force participation among men has dropped by 5.1% while among women it is 16.5%. This indicates that women have been affected, alarmingly, 3 more times than men. Although the graph indicates the general working population, its outcomes can be extrapolated to the the hospitality industry.
Many of these newly jobless women may be supporting families on their own, as a majority of single-parent households are female headed. Reports from Makueni County are indicative of how single mothers across the country are struggling to feed their families as the pandemic has negatively impacted their sources of livelihoods.
Equally affected are food distributors. Alongside hospitals and learning institutions, hotels and restaurants are bulk consumers of food. A multinational study by the Global Alliance for Improved Nutrition indicates that, with significantly lower demand, up to 20% of surveyed distributors — primarily small and medium-sized enterprises — are facing an existential crisis.
One Kenyan distributor was quoted as saying that the closure of schools, colleges, and universities, together with restrictions on transport and curfew, “put start-ups like ours on death row, as there is no market.” These impacts trickle down the supply chain as it affects all people involved, including drivers, loaders, and the farmers themselves.
Coping with the aftermath
Compared to the early days of the pandemic, a sense of normalcy has returned to Kenyan daily life. More businesses are operating, and the streets of Nairobi are teeming with people. The crazy, uneconomical traffic jams are back. Hawkers and city council officers are playing their usual cat and mouse games.
Whereas people are still taking safety precautions, the panic over Covid-19 has largely dissipated. It must be said, however, that this sense of normality largely has to do with the search for livelihoods, not apathy towards contracting the virus.
Although the government has allowed restaurants to operate, business has not been as brisk as it was before. Most people have cut their budgets for non-essential expenditure, which includes eating out. Furthermore, social distancing rules limit the number of people who can be served at a go. Among those still operating, some proprietors have complained of the high costs associated with meeting the government’s health regulations.
Hotels, especially those targeting foreign tourists, are in a tighter spot. Despite a re-opening of the Kenyan airspace in early August, it might take several months, even years, before there is a surge in arrivals comparable to the peak in 2018.
Many tourist destinations and hotels — including some that have been accused of racist policies which lock out Africans on their own land — have been forced to revise their business models. The Ministry of Tourism and Wildlife, which had earlier ignored public outcries, was also forced to scrap its 300% hike on park entry charges.
Crisis exposes deeper inequities
While these measures provide added incentives for local tourists, progress has been slow. A majority of Kenyans are struggling financially, hence unable to go for holidays.
The pandemic has also turned the spotlight on another increasingly controversial aspect of Kenya’s hospitality industry: Private wildlife conservancies.
Ever-larger tracts of rangelands, which were traditionally used as communal grazing lands by pastoralists, have been converted into private parks in recent years. At more than 6 million hectares, they currently cover a staggering 11% of Kenya’s land mass. This acreage dwarfs officially gazetted national parks and reserves.
These protected zones have become a privilege of the rich, offering sanctuary to wild animals for the benefit of (mainly foreign) tourists. Consequently, pastoralists are being pushed even further to the margins. This phenomenon is not only limiting grazing lands but also locking them out of key watering points and migratory routes.
The result has been a rise in conflicts between local communities and conservancy owners in Kenya as well as Tanzania. To compensate for the losses incurred, conservancies provide adjacent communities with “alternative sources of livelihood” within the tourism economy.
These include offering them employment as waiters, game rangers, drivers, tour guides and craftsmen. Covid-19 has exposed the inherent danger in this strategy by creating a system whereby communities that had independent, livestock-based livelihoods, have become heavily reliant on foreign tourists.
Covid-19 has revealed this weak point. With no tourists, no livestock, and no rangelands, a significant number of ex-pastoralists are struggling to survive. As a growing number of critics have stressed, it is time to critically reevaluate this conservation model.
Can the industry bounce back?
With KES 80 billion in losses, and counting, there is no telling how many lives this sinking Titanic will take with it to the bottom of the sea. Lifeboats are already being thrown into the chilly waters, as the band plays on:
In March, the government set aside KES 500 million (USD 5 million) to prop up the sector, five days after the first Covid-19 case was reported in the country. Two months later, as cases surged, the President allocated an additional 2 billion including a component for provision of soft loans to failing hotels through the Tourism Finance Corporation.
Whether these and future measures help keep the tourism and hospitality sector afloat, only time will tell. It is likely that it will be the last industry to recover from the pandemic, whenever that will be. Even once recovered, it is still unclear how the industry will look like and how many people it will be able to sustain.
It is, like most things in these uncertain times, a waiting game. In the meantime, affected people will have to seek alternative sources of livelihoods. If they have real alternatives, that is.
Written by Atula Owade
This article is part of Covid-19 Food/Future, an initiative under TMG ThinkTank for Sustainability’s SEWOH Lab project (https://www.tmg-thinktank.com/sewoh-lab). It aims at providing a unique and direct insight into the impacts of the Covid-19 pandemic on national and local food systems. Also follow @CovidFoodFuture, our Video Diaries From Nairobi, and @TMG_think on Twitter. Funding for this initiative is provided by BMZ, the German Federal Ministry for Economic Cooperation and Development.
