Recovery hopes dim for Zim hotels

Business
BY SHAME MAKOSHORI A new report paints a gloomy picture of prospects for a speedy recovery for Zimbabwe’s hotels, saying room occupancies will be under pressure from Covid-19-induced lockdowns and a freeze in global travel during early 2021, as governments fight to end the health crisis. IH Securities, an advisory firm that is a member […]

BY SHAME MAKOSHORI

A new report paints a gloomy picture of prospects for a speedy recovery for Zimbabwe’s hotels, saying room occupancies will be under pressure from Covid-19-induced lockdowns and a freeze in global travel during early 2021, as governments fight to end the health crisis.

IH Securities, an advisory firm that is a member of the Zimbabwe Stock Exchange, predicted last week that in spite of the hope that government had given to the sector in the 2021 budget, hotels room occupancies could plummet by 90%.

The report also gives a difficult outlook for the financial services sector, which it projects to see an upswing in non-performing loans as millions of people continue to be confined to their homes to avoid contagion.

It has been difficult to give a timeframe of how the pandemic will pan out, but the world remains hopeful that it fizzles out soon to give nations the headroom to rebuild shattered economies.

“As a result of lockdowns, we anticipate some contraction early in the year mainly emanating from supply chain disruptions, downside shocks and closure of access to the large informal sector,” IH said in its report, which looks at how the pandemic will affect the economy this year.

“Sectors that are expected to be the hardest hit include transport and distribution, financial services with marginally higher than expected number of non-performing, education, non-food manufacturing and ultimately tourism with above 90% drop in hotel occupancies.

“In light of the pandemic, it is our view that there might be downside expenditure risk in the form of further anticipated emergency relief funding and social safety nets paired with pressure from labour unions for upward review of civil service salaries,” said IH.

Simbisa Brands MD Warren Meares told Standardbusiness recently that the tourism sector, one of the key industries in Zimbabwe generating about US$2 billion yearly, faces one of its toughest years, with one big hotel already trimming staff to contain mounting headwinds.

“Every single business has done that (removed contract workers),” Meares said.

“I am on the retailers association, the minister of industry and hotels and catering WhatsApp groups (and I am well informed). Did you know that just one hotel has retrenched over 150 permanent workers?”

Simbisa Brands controls several top-end fastfood chains in Zimbabwe, some of which are strategically located in resorts to capture international tourists.

Another huge slowdown in hotels will further dent speedy recovery prospects for the leisure sector.

The tourism industry was affected by another 90% slide in arrivals in 2020 after governments across the world grounded airlines and restricted international travel.

In an extensive review of the impact of Covid-19 on the travel industry, the Zimbabwe Tourism Authority showed how the sector’s darkest patch almost grounded the economy after losing US$1 billion.

For now, however, a stronger recovery may not be guaranteed as the pandemic has been making fresh inroads into the country, with health officials reporting upsurges in new cases over the past two months.