Tourism in Kenya will suffer this year after Egypt slashed hotel rates by up to 50 percent to draw back visitors after weeks of political unrest, a major Kenyan hotelier said on Friday. Mahmud Janmohamed, managing director of hotel group TPS Eastern Africa, said Egypt's discounts would divert traffic from Kenya's beaches and safari parks.
The north African country's economy came to a halt after protests which toppled President Hosni Mubarak and stalled the vital tourism industry. "People may think events in Egypt will impact us positively. But as far as I am concerned they are creating competition because they have dropped rates by 40-50 percent," Janmohamed told Reuters in an interview.
Kenya's tourism sector earned a record 73.68 billion shillings ($887 million) in 2010, up 18 percent from a year earlier, while TPS registered a 33 percent jump in 2010 pretax profits to 692.9 million shillings. Kenya's political climate after the International Criminal Court summoned six suspects of the its 2008 bloody post-election crisis and ahead of 2012 general elections has dimmed its appeal.
"If Kenya starts to get a lot of bad publicity, people would think twice about booking Kenya. Tour operators who supply us with business are already asking us if there will be any problem (in 2012). There will always be nervousness," said Janmohamed. He said ripple effects from the global financial crisis continue to take a toll on Kenya's tourism, leading to last-minute bookings.
This was causing panic in the industry and forcing some hotels to offer too many special deal which are typically bad for the bottom line, he said. "Nowadays people are booking very short lead times because they not sure about a destination or whether they will have a job in six months," Janmohamed said. TPS has several cash-intensive projects for 2011 following a 1.2 billion shilling capital injection from last year's rights issue. Of this 600 million is yet to be drawn, while the group has shelved plans to raise additional capital.