More hotels face imminent closure…as COVID-19 impacts on hospitality linger on

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The predicament of hospitality facilities emanating from the outbreak of coronavirus lingers on, as there is no end in sight to the COVID-19 crisis.

COVID-19 precautionary and control measures like border closures, ban on public gatherings including conferencing and other social events like weddings have culminated to paralyse the hospitality industry. The situation has compelled many hotels to completely or partially shut down until further notice.

On Sunday, May 10, 2020, President Nana Addo Dankwa Akufo-Addo extended the ban on public gatherings until end of the month, while the country’s borders also remain closed. The restrictive measures are geared toward curbing spread of the virus as confirmed cases continue to soar. As at May 12, a total of 5,127 cases had been confirmed as against 22 deaths.

Obviously, extension of the restrictive measures coupled with future uncertainties will further deepen the woes of hospitality facilities. The industry fallout currently unfolding is undoubtedly challenging, and more hotels have hinted at closing down should the situation persist for a while.

The General Manager of Eusbett Hotel – a 3-Star facility in Sunyani, Robert Mensah, in an interview with the B&FT said since beginning of the COVID-19 crisis, the hotel has taken some difficult but inevitable measures, including job cuts to stay afloat – lamenting “if the ban on conferencing is not lifted soon, say till the end of the year, as a business hotel we will have no other choice than to shut down business”.

He revealed that the occupancy rate of the 150-room hotel with ten conference centres has reduced significantly, from 88 percent as at the imposition of the ban on public gathering to two (2) percent. The situation he noted, has accounted for cutting down staff from 154 to 60, adding: “Of the remaining 60 workers, we run a two-week shift system whereby 30 people are on duty at a particular time.

“The planned stimulus package for the hospitality industry is commendable – but to further help salvage the situation in this COVID-19 era and post-COVID-19, government must put hotels on a 3% corporate tax flat rate rather than the prevailing rate. A waiver on deduction of withholding tax, and exemption from import duties on core hospitality equipment for maintenance after the crisis are needed,” he said.

A 2-Star facility in Sunyani, Tyco City Hotel with 152 rooms and eight conference centres, also faces similar doldrums stemming from the impact of COVID-19. Since the implementation of restrictive measures in the country, occupancy at Tyco has considerably dropped and is hovering between 2%-5%.

The CEO of Tyco City Hotel, Nana Kwame Aning who disclosed this to B&FT, said the workforce of 85 has been reduced more than 50 percent, saying: “In the worst-case scenario, we will close the hotel should the situation linger on for long”.

Both Tyco CEO and Robert of Eusbett share the view that it has become important government and health authorities to institute and enforce comprehensive safety protocols for conferencing and other social gatherings to take place. This, they observed, will gradually help breathe life back into the hospitality industry as well as cushion resurrection of the economy, particularly in the area of job creation and tax contribution.

Already, Falls Palace Hotel – a 2-Star facility at Kintampo in the Bono East Region, has closed down after it kept recording zero occupancy for a while. Management of the 25-room hotel closed it on March 24, 2020.

Certainly, COVID-19 is the greatest global phenomenon crippling the hospitality industry since the global financial crisis in 2008. It will affect all levels of hospitality, but not everyone has the same capacity for recovery. Large hotel chains will certainly bounce back quickly, but for all other establishments the pandemic is a test of adaptability and resourcefulness.

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