Fallout of COVID-19 outbreak : Hotels & banks in talks over debts

….as some luxury hotels cease operations

The ongoing novel Coronavirus (COVID-19) pandemic has put the country’s hospitality industry in its own state of lockdown, with a number of luxury hotels now in talks with their banks on restructuring or deferring payment on huge debts taken out on construction and commercial activities as room and occupancy rates plummets.

The concern among some of the members of the Ghana Hotels Association is that, a huge part of the debts is owned by individual Ghanaian investors who now risk defaulting on their loans and want government’s reliefs to keep them afloat if the spread of COVID-19 continue to persist over the next two to six months.

Ghana’s stable democracy and a rise in international tourist traffic in addition to increase in international conferences and meetings over the past two decades has seen an increase in hotel construction with several franchise businesses and global brands opening businesses in Ghana.

While most hotel investors have planned to consolidate gains in the industry following the hugely successful Year of Return campaign, the outbreak of the COVID-19 is rocking the fortunes of hotels with particularly top-end ones taking a huge hit, forcing them to cease some of its operations with the coronavirus plummeting room and occupancy rates.

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Presently, almost two-thirds of the country’s finest hotels and big brands have cut a chunk of their operations including the restaurants, catering/bar services and business sections with majority of them now operating under five percent of their capacity.

This has affected their cash-flow and capacity to service their debts and retain staff.

Consequently, a significant number of their staff have been sent home as uncertainty grows with each day amidst the spread of the virus across world.

An official of a 5-star hotel in Accra, who declined to be named because he’s not authorized to speak to the press, said COVID-19 has now put a lot of the hotels on their knees.

“We are feeling the heat. Occupancy rate has declined by almost 98%. In response, we have also reduced our rates to attract local bookings, yet the uptake has been slow; almost non-existent,” he said.

It is understood the Ghana Hotels Association are preparing to make a strong case to the government for reliefs and tax breaks in order to cushion their members against a decline in revenue.

The outbreak of the coronavirus (COVID-19) in Ghana in early March and a subsequent increase in infection rates forced the government to ramp up international travel restrictions in a bid to reduce imported cases of a virus that has so far claimed four lives.

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The international travel restrictions as well as ban on public gatherings have pushed commercial airlines to suspend their operations to Ghana and get event organizers to either to indefinitely postpone or cancel many conferences, workshops and meetings.

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