Kenyan Hotel Chain H1 Profits Down On Security Woes

July 31, 2014

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Hotelier TPS Eastern Africa reported first-half 2014 pretax profit down by almost three quarters, saying the Kenyan tourist business had been hurt by a spate of militant attacks and travel warnings by several Western nations.

The firm reported pretax earnings of KES58.25 million shillings (USD$664,200) in the first six months of this year, down from KES205.08 million in the same period of 2013. It said its Tanzania and Ugandan businesses delivered good performances.

The business outlook for this year's peak season, running from July to October, was at "satisfactory levels", TPS Eastern Africa said.

"The group faced a challenging business landscape in Kenya during the first half of year 2014," the operator of the Serena chain of luxury hotels, lodges and tented camps said in a statement.

Kenya's tourist industry has been buffeted by security worries. Last year, many tourists stayed away before elections in March for fear the vote would be marred by violence as in the past, although that poll went off calmly in the end.

In September 2013, Somali-linked Islamist militants attacked Nairobi's Westgate mall and left at least 67 people dead. Since then, a series of attacks, many of them along the coast, has prompted several Western nations to warn their citizens against travel to some areas of the east African nation.

The security worries and travel advisories have emptied many beach resorts as well as hurt bookings on Kenya's popular inland safaris, damaging an industry that is a vital source of income for the east African country.

When the Kenya Tourism Board said this month that arrivals in the first four months of the year were down just four percent from a year earlier, TPS East Africa said the numbers underestimated the problems facing the industry.

TPS Eastern Africa said the introduction of Value Added Tax on tourism services and park fees in Kenyan had made the country uncompetitive relative to other similar destinations.

The firm, which also operates in Rwanda and Mozambique, said sales fell to KES2.71 billion shillings from KES2.92 billion, while earnings per share dropped to 0.13 shilling from 0.69 shilling in first-half 2013.