Coca-Cola and its partners are boosting the hotel sector recovery during the post-Covid-19 era

January 28, 2021 Newsroom

The image of Mojos, a famous city restaurant being torn apart underscores the reality that many recreational businesses may not reopen after the coronavirus pandemic.

For most hotels, bed occupancy has remained low despite hotels reopening to take advantage of the end year festivities and recoup losses incurred on the effect of coronavirus disruptions on foreign travel and local restrictions on movement.

Central Bank of Kenya (CBK) Governor Dr. Patrick Njoroge said during a post-Monetary Policy meeting that a survey conducted on hotels revealed that bed occupancy in Nairobi stood at 17 per cent while the rest of the country stood at 30 per cent.

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Kenya remains cautiously optimistic that the tourism and hotels sector will turnaround following the easement of containment measures.

However, reopening businesses in times of tax uncertainties, low demand and need for investment in government imposed social distancing regulations has become a big challenge.

Introduction of the 1 per cent minimum tax, slow economy as well as need to invest in redesigning floor space, equipping staff with PPEs, setting hygiene points are affecting small businesses.

This comes at a time when they can barely get access to loans from banks due to heightened risk and higher loan defaults across sectors of the economy.

But Businesses are not giving up, not with the huge number of Kenyans fired from their jobs as a result of the pandemic who are trying to get back on their feet.

Data from the Registrar of Companies shows the business names registered between April and November rose 58.5 percent to 65,782 compared to 41,490 in a similar period last year — making it the fastest jump in decades.

Small businesses are hopeful they will get support from the government including the SME guarantee fund that will support their survival with much needed financing.

But even this comes with strings attached since the government will still require small business to provide collateral for the loans that include assets like machinery and other property since Treasury will only take a portion of the losses in case an SME defaults on payment of the loans.

Private sector solutions are proving more effective for small businesses. For instance, the well-coordinated effort by Coca-Cola Beverages Africa, Absa bank, AMREF and Women Enterprise Fund in a campaign dubbed ‘Open Like Never Before‘ .

Under the initiative, hotels, restaurants, bars, general shops and official Coca-Cola Distributors have their staff are further equipped with PPE’s, sanitizers and hand washing stations, garden furniture to support social distancing, communication and awareness materials related to COVID-19 safety and precautions to help them maintain hygiene and minimize the spread of the virus.

A partnership between Coca-Cola, Absa Bank, Women Enterprise Fund and Cooperative Bank helps provide loans to MSMEs within the Coca-Cola Value Chain to enable them to restock and operate their businesses. Absa continues to scope, and credit score more businesses who may qualify for working capital financing.

Coca-Cola has also partnered with Amref Health Africa to train its trade partners (kiosks and eateries) on how to re-open and operate safely in line with the COVID-19 regulations.

The beverage company has also roped in PETCO, to support waste pickers and collectors with personal safety and hygiene supplies that meet government recommended waste management re-opening protocols.

This gives a multifaceted approach that ensures that businesses are not only funded but facilitated to operate under the very unique conditions of the pandemic.

It is a holistic approach that ensures that money to fund small businesses ends up in the right place and supports recovery rather than get spent in incidentals.

The recreational business has borne the brunt of the pandemic as part of the lockdown measures and night time curfews. Restaurants have been forced to shut down or operate sub-optimally while shoppers limit expenditure to purchase essentials.

Fitch Solutions consumer spending outlook revised forecasting real household spending to grow by 4.8 per cent in 2020, from the pre-Covid-19 forecast for 2020 of 6.1 per cent growth.

“As part of the curfew restaurants, taverns, hotels have been closed. While consumers can still get alcohol and tobacco products at supermarkets, we believe they will spend on priority purchases (food and health products), especially if economic conditions worsen,” the consumer insight report said.

The National Treasury says in a November Paper titled Post Covid-19 Economic Recovery Strategy 2020-2022 shows that the sector has taken a Sh72 billion hit following the containment measures taken by different countries to shut down international and local borders in an attempt to contain the spread of the virus.

Hotels alone will lose Sh56 billion on low occupancy and cancellation of reservations while catering and other associated services like entertainment, tours and travel, park and game drives will lose about Sh16.2 billion.