Travel advisories, terror threats and a new VAT tax imposed by the Kenyan government all contributed to profits being down 25 percent in 2014, according to the company that owns Serena hotels and lodges, AllAfrica and CNBCAfrica report.
TPS Eastern Africa Limited (TPSEAL) issued a profit warning for its 2014 financial year, as required by the Nairobi Securities Exchange for firms that expect profits to drop by more than 25 percent compared to the previous year, CNBCAfrica reports.
The company’s after-tax profit for the first six months of 2014 dropped 71 percent to 41 million shillings ($449,000), according to AllAfrica.
A key player in the regional tourism sector, TPS Eastern Africa’s performance compared unfavorably to 205 million shillings recorded in the same period the previous year, CNBCAfrica reports.
All sectors of the Kenyan economy grew except hotels and restaurants, which have consistently declined since 2013, the Kenya National Bureau of Statistics said in its quarterly review.
The Kenyan economy grew 5.5 percent during the third quarter of 2014 — lower than 6.2 percent recorded in the same period in 2013 — dragged down by the accommodation and restaurants service sector, AllAfrica reports.
The Serena Group is a collection of 32 luxury resorts, safari lodges, and hotels in East Africa (Mozambique, Kenya, Rwanda, Tanzania and Uganda) and Central and South Asia (Pakistan, Afghanistan, and Tajikistan), according to the Serena website.
The hotels group is listed on the Nairobi Stock Exchange and is part of a larger group of companies that trades under the name Tourism Promotion Services (TPS).
TPS Eastern Africa said a challenging environment in Kenya led to a significant slowdown in charter flights and new leisure bookings, AllAfrica reports.
“In the last quarter of the year, the Ebola epidemic origination from West African countries negatively impacted all African tourist destinations,” the company said.
Serena management also said the introduction of value added tax on park fees and tourism services in September 2013 made Kenya uncompetitive compared to other destinations, AllAfrica reports.
Perceived health risks in Kenya also hurt the local travel industry due to the country’s geopolitical location and connectivity with West Africa.
The impact of Ebola perceptions was more noticeable in East than in Southern Africa, according to a survey by SafariBookings.com, a Netherlands-based travel firm, CNBCAfrica reports.
Bright spots in the Kenyan economy included strong growth in insurance, finance, construction, agriculture and forestry, wholesale and retail trade, information and communication, according to AllAfrica.