COVID-19 : Hotels seek GH¢324m monthly bailout

The hotel sector in the country, currently on its knees as a result of the coronavirus pandemic, is seeking some GH¢324million monthly in stimulus package to keep them open and sustain jobs, a B&FT analysis has shown.

A proposal document, expected to be forwarded to the Finance Ministry soon, pegs the number of hotels across all stars at 3,000. Out of the figure, up market hotels – which covers three- to five-star hotels – make up about seven percent or 210; while one- and two-star hotels account for about 33 percent or 990; and budget hotels account for 60 percent or 1,800 of the total figure.

With a focus on payroll expenses, administrative and statutory payments, the up-market hotels across the country spend averagely some GH¢1million each monthly; which brings in a total of GH¢210million to keep their operations running.

For the one- and two-star hotels, they each spend GH¢80,000 on average, which brings a total of GH¢78million monthly; while the 1,800 budget hotels spend some GH¢36million on their operations monthly. According to the document, with the above figures, a total of GH¢324million will be needed to support operations of the sector per month.

Already, the B&FT can confirm that some 16 hotels in three regions have lost almost GH¢63.1million – equivalent to US$11.8million (Bank of Ghana, March 19, 2020 mid-rate of 5.3480) – due to cancellation of room bookings and conferences scheduled for the months of March and April. Of the 16 hotels, one is based in Eastern Region, one in Bono Region and 14 in the Greater Accra Region.

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The hotel in the Eastern Region has lost some GH¢1.7million, while the hotel in Bono Region lost about GH¢2.16million after cancellations of room bookings and conferences over the two-month period. The 14 hotels, including some five-, four-, and three-star hotels based in Greater Accra lost about GH¢59.2million as a result to the cancellations.

Many of these cancellations happened after the president’s directive against mass gatherings and announcement of a travel advisory by the information minister – all in the bid to contain and prevent spread of coronavirus in the country. The situation, according to the Ghana Hotel Association (GHA), is likely to worsen in the coming months if nothing is done to support its members be operational.

The GHA has however sent a petition through the Ghana Tourism Authority to the finance ministry for support. The Association is asking for a clear bailout and rescue plan (financial and practical), laid out by government for both staff and business owners. It is asking for transparency on timelines for bailout and rescue plans, so businesses can prepare logistically and rationally for the turbulent times ahead.

The hoteliers want utility tariffs reduced by at least 65 percent till December 31, 2020; and water tariff be reduced by 65 percent till December 31, 2020; suspension of the 1 percent Tourism Levy, and use of current reserves to aid in hotel bailouts, while VAT reduces the output rate for hotels to match the 3 percent input rate paid by all suppliers.

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They are also asking for property rates to be reduced by 50 percent, and want the Environmental Protection Agency (EPA), Ghana Music Rights Organisation (GHAMRO) and Audio-Visual Rights Society of Ghana (ARSOG) to suspend charges until further notice.

The Association, in the petition, asked government to urge banks to stop charging the principal and interest on loans over a period of at least six months; and also a SSNIT support, by paying a portion of employee’s contribution as salary over a six-month period. Finally, import duties on food and non-food products for hospitality should be cancelled till December 31, 2020.

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