The listed hotel chain which owns the Serena Hotels and lodges said its earnings have been greatly impacted by travel advisories to Kenya because of insecurity. The hotelier says the 2014 has been bogged down by travel advisories as well as threats of terror in Kenya. This has seen the sector record historical lows in tourist arrivals in the country.
Therefore, the Nairobi Securities Exchange (NSE) listed hotelier expects its profits to drop by more than 25 per cent as a result of reduced tourist activity in the East African Country.
“During the year 2014, the company faced a challenging business landscape in Kenya, which to some extent caused a ripple effect in the East African region,” the hotelier said in a statement.
“Foreign leisure and to a lesser extent, corporate business segments took a cautious approach due to the elevated travel advisories and other forms of security alerts issued by governments of main source markets.”
Pursuant to regulations of the Nairobi Securities Exchange Listing Manual and the country’s markets authority, firms listed on the Nairobi bourse are required to issue a profit warning to investors if they expect their profits to drop by more than 25 per cent in comparison to the previous year.
A key player in the regional tourism sector, the firm recorded a 71.7 per cent drop to 58 million shillings in its half year 2014 report. This compared poorly to 205 million shillings recorded in a similar period last year.
The group’s operating costs declined at a slower rate than revenue in what was attributed to high operating expenditure.
The hotelier has also cited that the Ebola outbreak in West Africa has negatively impacted not only Kenya’s tourist destination but all African tourist destinations.
According to a survey carried out by SafariBookings.com, a by Netherlands-based travel firm, the tourism sector numbers have been hampered by the Virus that is thousands of kilometers away from the region.
“The impact is more noticeable in East than in southern Africa. It is a heavy blow for the industry and the numerous wildlife reserves that rely on its revenue,” read a statement from the travel firm’s site.