PHOTO | FILE Travellers’ Beach Hotel in Mombasa. The National Treasury
issued a directive prohibiting ministries officials from holding
government functions in privately owned hotels, aimed at cutting
spending to raise money for the supplementary budget.
NATION
The hospitality industry faces some hard
times ahead as a new regulation by government banning the holding of
functions in private hotels takes effect.
The
directive is part of the austerity measures spelt out by National
Treasury Secretary Henry Rotich to help reduce government spending. In a
December circular, the Treasury instructed cabinet secretaries to
implement the regulation.
“Such expenses are hard to justify and should be discouraged at all times,” the circular read.
The
ban adds to the woes facing the hospitality industry which is reeling
from effects of the Value Added Tax that is likely to reduce the number
of people touring the country.
The Kenya Association of
Hotel Keepers and Caterers has expressed misgivings about the
proposals, terming them as “misplaced”, noting there are other glaring
areas that gobble up government’s billions.
STRUGGLING SECTOR
Association
chair Mike Macharia said the government does not have the capacity to
handle all its catering needs, urging that the decision should be
reconsidered to minimise costs but not totally bar its departments from
doing business with private hotels.
Mr Macharia said
Government patronage was key in any industry, and barring some from
doing business with government will affect jobs.
He
noted that hotel capacity for over 2,500 persons was created last year
and the proposal portends tough times for the catering industry.
Some
of the hotels where the government has a stake are the Intercontinental
and the Hilton in Nairobi — among Kenya’s most profitable hotels and
part of Nairobi’s architectural landmarks — and Nyeri’s Serena Mountain
Lodge. Others include the Moringat Training Centre in Naivasha, The
Kenya Utalii College-cum-hotel, the Mombasa Beach Hotel and Sunset
Hotel. North Coast Beach Hotel is also owned by Kenyatta University,
which is a government entity.
However, the government has been toying with the idea of selling its stake in the 11 hotels.
The
developments come just after the Kenya Wildlife Service increased fees
for visiting national parks, game reserves and other wildlife
sanctuaries. The new fees arose from a 16 per cent Value Added Tax (VAT)
imposed on tourism following in September l.
In the
past, East African citizens and residents have paid Sh1,000 for a day’s
ticket to prime parks like Amboseli while non-residents were charged
$80. The fees have gone up by 16 per cent to account for VAT.
The
developments come against the backdrop of struggling tourism as
revealed by the Kenya National Bureau of Statistics figures which show
declining tourists.
Last October the bureau said
economic growth was held back by a major contraction in the industry
that continues to suffer from a decline in visitors
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