Business Daily (Nairobi)
Wangui Maina
22 January 2008
Details of the loss the economy has suffered since the country was thrown into a political crisis three weeks ago continued to emerge, with the Kenya Wildlife Service's announcement that it had suspended acquisition of 101 new vehicles it had ordered due to a steep slump in tourist arrivals.
Dr Julius Kipngetich, the managing director , said the organisation had planned to modernise and enlarge its fleet to meet rising demand in a booming tourism industry, but marketing conditions had suddenly changed forcing it to review its plans.
Outbreak of political violence on December 30 following the declaration of Mwai Kibaki as the winner of the presidential poll has seen tourist arrivals drop by more than 80 per cent.
This has prompted tourism sector players like KWS to review their plans.
Dr Kipng'etich said KWS would also revise its profit targets for the current financial year that ends in June. "We expected to make a Sh3 billion profit, but may not even beat last year's earnings," he said.
Last year, KWS made a Sh2 billion profit, riding on increased number of visitors to its parks.
Cancellation of orders has left car dealers such as Toyota, CMC and General Motors feeling the pinch of the sudden slump in tourism. KWS suspended its order for Toyota Land Cruisers, Land Rovers and trucks.
Stefano Cheli, the managing director of the Cheli & Peacock camps, said his company had also cancelled an order for five vehicles from Toyota Kenya.
CMC Holdings- one of the major car dealers in Kenya - recently issued a profit warning saying disruption of the tourism industry had badly dented its second quarter sales.
CMC sells Land Rover and Nissan Diesel brands that are popular with tourism sector operators.
Recent growth of the tourism sector had boosted sales of new vehicles. A slump in the sector is expected to hurt sales in this segment of the market, at least in the first quarter of the year.
The tourism sector has been hit by widespread cancellation of trips prompting a drop in the number of weekly charter flights from 44 per week to four.
Hotel industry operators say the number of passenger seats on Mombasa-bound charter planes had dropped by 94 per cent to 1,918 from the initial forecast of 34,448 seats a week.
Charter flight capacity on the route had grown by 10 per cent from 31,320 the previous year. During the first quarter of 2008, the seat capacity was expected to hit the 103,344 mark compared to 82,400 realised over the same period last year.
Post-election analysis shows that seat capacity in the first quarter of the year may drop to 5,754, with only four charter companies out of the 18 that had initially planned to ply the route maintaining their shedules. The four include Monarch, Euro Fly, Condor and LTU.
"Occupancy in Mombasa-based hotels has dropped from over 90 per cent to single digit figures, forcing us to dig into our reserves that are fast disappearing," the managing director of Serena Hotels Mahmud Jan Mohamed said. He said eight hotels had closed shop in Mombasa and Malindi, with a lodge in Samburu expected to follow suit, putting up to 20,000 jobs on the line.
Arrivals at Malindi and Watamu, the most favoured destinations for Italian tourists, have dropped to rock bottom after Air Italy, a charter plane that lands in Mombasa three times a week suspended its services.
The services were suspended after the Italian government issued a travel advisory against travel to Kenya.
Though no scheduled airline is yet to pull out, main operators to key airports such as Nairobi's Jomo Kenyatta International Airport such as Kenya Airways and Virgin Atlantic have cancelled some of their flights.
With no tourists visiting the coastal towns KWS is losing revenue in its marine parks, Amboseli, Tsavo East and West which are part of the coastal circuit.
Tourism was expected to outperform the Sh60 billion it earned in 2007 a feat that now looks unlikely to be realised.
"If the impasse continues, the sector can as well say goodbye to the second half of 2008, our peak season," Kenya Association of Hotel Keepers and Caterers (KAHC) chairperson, Lucy Karume, said.
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