Catering industry in financial distress

30 Dec, 2022 - 00:12 0 Views
Catering industry  in financial distress

eBusiness Weekly

Oliver Kazunga

Catering Employers’ Association of Zimbabwe says this year has proved to be one of the most difficult years for the hospitality industry as the Government suspended payments claiming some players overcharged their bills.

Recently, Finance and Economic Development Secretary George Guvamatanga, is on record saying the Treasury suspended payments to some hotels and lodges due to overpricing of the hotel rates, which has created a huge bill for the Government.

He indicated that suppliers have been using forward pricing models and benchmarking prices to front load parallel market exchange rates leading to extortionist pricing of goods and services supplied to Ministries, Departments and Agencies (MDAS), which was not anchored on economic fundamentals.

Speaking by telephone from Bulawayo this week, Catering Employers’ Association of Zimbabwe past president, Joe Kawema, said due to the Government’s action, some hotels and lodges that are owed huge sums of money by the Treasury are now in financial distress.

He said the affected hoteliers and lodges have ceased taking bookings from the Government.

“Although we have seen a bit of improvement in the overall performance of the tourism and hospitality industry in 2022 as the sector emerged from the adverse impact of the Covid-19 pandemic, the year has been one of the most difficult years in the hospitality industry.

“This is largely because during the course of the year, the Government stopped payments for bookings to some hotels and lodges claiming that the rates were inflated. As a result, those that are owed millions of dollars are failing to come back into the business,” he said.

“Some of the players in the hospitality industry have stopped taking bookings from the Government as a result of what the Government has done.”

Kawema said the tightening of payments to players in the hospitality industry, there has also been limited bookings by Non-Governmental Organisations (NGOs) that have been sponsoring Government MDAs in sectors such as health and education sectors.

“I am aware that the mother suppliers of NGOs in countries like the United Kingdom and America have reduced what they used to spend on NGOs in the country to support programmes like workshops in hotels and lodges by the MDAs,” he said, adding that due to subdued revenue, some players have had to let go permanent employees resorting to reliance on student on industrial attachment to cut down on employment costs.

In terms of overall performance of the tourism and hospitality sector, Kawema said the country has this year registered a significant increase in arrivals particularly in the resort city of Victoria Falls as some airlines were flying directly into that resort centre.

Going forward into 2023, more international airlines are expected to start servicing the country, while some from the 14 already doing so, are considering expanding their operations through increased frequency and use of larger aircraft following improvements in Zimbabwe’s aviation infrastructure.

The 14 international airlines flying into the country include Emirates Airlines, Eurowings Discover, Qatar Airways, KLM (Cargo), MackAir, Kenya Airways, RwandAir, and South African Airways.

“What has also led to the upping in international tourists coming to Victoria Falls is the direct flight services being offered by some big airlines.

“In the past, we used to see tourists coming to Victoria Falls having to go through Harare first before getting into Victoria Falls, but now we have some airlines connecting directly into Victoria Falls. This attracts international tourists as they cut down on their costs as they are connecting directly into Victoria Falls,” he said.

Meanwhile, tourist arrivals in the first nine months of the year to September increased remarkably with statistics on international visitors rising by 256 percent while that for tourists from Africa improved by 130 percent from the corresponding period last year.

“Just to give you the figures, around 260 000 tourists came from the international market and then from Africa, we witnessed about 432 000 tourists giving us a 130 percent jump from the same period last year.

“So, in total this year from January to September, we had received about 692 000 visitors compared to 261 000 in the previous year.

“We have seen quite a huge jump in the growth of Meetings, Incentives, Conferences and Exhibitions (MICE) tourism and domestic tourism has done quite well, we have seen quite a huge jump in terms of people travelling within the country,” the Zimbabwe Tourism Authority (ZTA) head of corporate affairs Godfrey Koti said in an interview this week, adding that the ZimBho Campaign is something also spurring growth in the tourism industry.

He said Zimbabwe’s tourism receipts clocked US$580 million during the period under review reflecting a huge jump of 137,7 percent from US$244 million realised last year.

Koti attributed the improvement in tourism receipts for the period January to September 2022 to the resurgence of activity as the sector was recovering from the Covid-19 pandemic as well as the growth in the promotion of MICE tourism.

In the wake of the Covid-19 pandemic, the tourism industry was the hardest hit as world economies imposed travel restrictions and national lockdowns in line with the World Health Organisation (WHO) guidelines to curb the spread of the respiratory disease.

On tourism investment, he said, Zimbabwe for the nine-month period received about US$306 million, quite a significant amount compared to the same period last year, where about US$90 million of investment into the sector was received.


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