Kenya's tourism sector unlikely to recover in 2021
A new report by Deloitte has revealed that Kenya's tourism sector faces an uphill task of recovery post COVID-19. Dubbed 'Economic Impact of the COVID-19 pandemic on East African economies', the report estimates that tourist arrivals declined by 78.4 percent in 2020 compared to the 2019 average.
This translates to a 99.7 percent decline in earnings from Sh163.6 billion in 2019 to Sh0.5 billion in 2020. This has left more than 1.1 million individuals employed in the sector in disarray.
The sector has historically contributed to about 9 percent of Kenya's GDP. In June last year, 1.3 percent of firms in the sector reported a significant reduction in the number of employees. The data collected by Ministry of Tourism showed that 85.5 percent of firms issued pay cuts while 81.9 percent of the firms reported implementation of unpaid leaves.
"The decline in international tourism arrivals led to an abrupt and unprecedented drop in hotel demand that led to the closure of most hotels, consequently sending staff home on unpaid leave or worse, permanent dismissal," the report says. The report puts total loss in hotel room revenue for 2020 is estimated at USD 511m.
The national carrier was already in distress way before the pandemic, posting a whooping net loss of Sh19 billion for the period ended 30 June 2020, a worse off position from the Sh13 billion loss posted in the 2019 financial year. According to the report, the airline lost more than 80 percent of its passenger traffic in 2020 and was forced to seek over Sh7 billion in bailout from the national government in order to survive through the tumultuous times.
"The full year revenue loss for the carrier in 2020 is estimated to have surpassed Sh53 billion," the report revealed.
The report expects social distancing measures implemented to fight off the third wave of the pandemic to leave tourism levels in 2022 below historic levels.
"Despite this, the tourism sector is expected to post modest recovery in 2021 with international arrivals forecasted to rise by 37 percent to 806,000."
