TPS Eastern Africa H1 profits down due to insecurity in Kenya

by Elayne Wangalwa 0

This compared poorly to 205 million shillings recorded in the similar period last year.

The company that owns the Serena Hotels noted that the poor performance was largely attributed to insecurity in Kenya. However, It’s Uganda and Tanzania arms performed well in the period under review.

(READ MORE: Kenyan tourism faces negative impact due to domestic terrorism)

A key player in the regional tourism sector, the firm says the first half of the year was bogged down by travel advisories as well as threats of terror in Kenya. This has seen the sector record the lowest historical numbers of tourist arrivals in the country.

I think the first half is obviously extremely challenging for Kenya. However, the good news is thanks to migration Kenyan companies particularly in [Maasai] Mara, within the Laikipia region and Nairobi are recording satisfactory levels. In fact, Mara is very buoyant. The only gap is the Kenyan coast where we have a hotel,” Mahmud Jan Mohamed, managing director at TPS told CNBC Africa.

Kenya’s tourism sector recorded a four per cent decline in international arrivals between January and May to 381,000 arrivals in comparison to the same period last year.

According to the listed firm, an introduction of Value Added Tax (VAT) on tourism services and park fees by the Kenyan government also made its offerings uncompetitive.

The group’s operating costs declined at a slower rate than revenue in what was attributed to high operating expenditure. The hotel chain says it has been strengthening its ‘Serena Safari circuit’.

Net interest expense was down 31.0 per cent year-on-year.

TPS East Africa’s exchange loss on foreign currency loans jumped up 179.9 per cent to 14.5 billion Kenyan shillings. Management however noted that the Uganda and Tanzania units had fair performances following the success of the regionalisation strategy that TPS East Africa pursued. The company expects the Uganda and Tanzania segments to continue driving growth in 2014.

Despite the poor performance in Kenya, Nairobi Serena Hotel has been listed in 2014 World’s Best Awards, as one of the top hotels in Africa and the Middle East. The hotel rated 13 out of 15 with a score of 81.11 per cent.

TPS East African Limited closed trading at 37.00.