HomeLocal NewsHoteliers push for cheaper loans

Hoteliers push for cheaper loans

AFTER tourism industry recovery hopes dimmed in the past two years due to Covid-19 pandemic-induced lockdowns, there has been optimism worldwide that the sector will begin to recover this year, as governments relax travel restrictions. This week, our Business Reporter, Freeman Makopa (FM) spoke to Hospitality Association of Zimbabwe president Farai Chimba (FC) to understand if this optimism is shared across the entire sector. Below are excerpts from the discussion:

Fact file: Farai Chimba

  • Is the president of Hospitality Association of Zimbabwe and assistant governor Rotary Clubs of Hwange, Victoria Falls and Livingstone, Zambia;.
  • Holds qualifications in hospitality management from DMC Hospitality School and American Motel and Hotel Association;l Advanced Diploma in Hospitality Operations with City and Guilds;
  • Certificate in Property Investment and Development from University of Cape Town;
  • Joined Meikles Hotel in 1999 as trainee;
  • Was appointed in 2001 as banqueting sales executive;
  • In 2003, he was appointed as banqueting manager;
  • Food and amp; beverage manager and resident manager in 2005;
  • Joined The Victoria Falls Hotel Partnership in 2008;
  • Appointed as deputy general manager in 2011;
  •  Appointed as general manager in 2020; and
    Has 21 years experience in the hospitality industry working in the country’s premium five star properties in various management positions.

FM: What is the current state of Zimbabwe’s tourism sector?

FC: We have seen some level of resumption of business. We are happy with the progress so far made in the recovery process. The domestic market remains strong. City and country hotels have posted above 60% occupancy rates. Resorts, while lagging behind, have seen an upswing since April after the opening of borders and easing of entry requirements for vaccinated travellers. It is estimated that over 9 000 jobs were lost in the sector (at the height of the pandemic), with most leaving the industry permanently.

FM: What has been the impact of this?

FC: This has had a negative impact on experienced skill across the country. We are, however, not unique in this predicament as it is affecting the entire global hospitality business. Some operators have failed to open due to labour shortages. That said we expect the steady growth to continue going ahead into traditional peak months.

FM: What are the most immediate measures to be taken as the industry recovers?

FC: There are immediate and long-term issues that need to be attended to. Some of the key ones are rebuilding the sector out of Covid-19. We must look at what resources are available to retool and uplift the national product. Human capital capacity building is also key in driving value for stakeholders in our sector. We must build sustainable destinations that are climate friendly.

FM: Is the hospitality sector geared to help the government achieve its development goals?

FC: This is a low-hanging fruit and there is minimal investment needed to achieve returns. But investment is still needed. We are considered a high-risk industry which is something that needs to be embraced. With the risk comes a high return.

FM: What would be the ideal financing model for the industry?

FC: A financing cocktail is needed that gives lower interest rates along with grants and concessions on some of the licences and statutory obligations that haunt the industry among a few. As global travel resumes key travel destinations include Africa. In Africa, we must be geared up for new travel trends. We have no doubt we can achieve the accelerated growth that comes with it with sound marketing and promotional initiatives on the global and regional markets.

FM: There have been concerns over the stock of rooms in Zimbabwe’s tourism industry. What is your view?

FC: The room stock has potential to be expanded if we are to grow numbers as a destination. This presents opportunities for new investment into properties and products to drive value from meetings, incentives, conferences and events to come from international and regional markets. Identifying gaps existing with new and diversified products is something that the association is keen to play a part with Zimbabwe Tourism Authority and the Zimbabwe Investment and Development Agency (Zida) in attracting new investment into the sector, which will complement existing infrastructure and grow the industry. However, we have noted many new developments that are still below regional and international standards, which does not make us competitive. Benchmarking of our products needs to be done.

FM: Arrivals have generally been rising recently. Tell us about tourism receipts.

FC: Tourism receipts are on an upward trend. In 2021, Zimbabwe recorded US$397 million, a growth of 10% from the prior year. This is bearing in mind occupancies were affected by lockdowns and restrictions. We anticipate the upward trajectory to continue as travel opens up.

FM: Are Zimbabwe’s tourism industry rates competitive? There has been an outcry over pricing.

FC: There are key fundamentals that affect pricing. Among them are supply and demand factors. These determine pricing in most cases. Room stock for Victoria Falls is below 2 900.

Mainstream hotels account for less than 1 200 rooms. Neighbouring Botswana, which you have mentioned, has a much more limited room stock and contrary to belief, their product is much more expensive due to high demand on low room stock. As continued investments come into this destination, the more likely we will see rates reduced. We also look at the micro- and macro-economic environment prevailing and the value chains that feed into our sector. The environment has been volatile, with inputs like fuel and electricity being drivers of high costs. Hotels, lodges and related services are the end receivers of this cost build up from other industries. They pass on the costs to the consumer.

FM: What relief are you expecting from the government as an industry?

FC: Operationalising a revolving tourism fund will go a long way in helping operators access funding for refurbishments, new investments and retooling. The cost of credit and borrowing remain prohibitive, especially coming out of the worst era for tourism since independence (Covid-19 lockdowns). We have seen some measures to stimulate tourism recovery such as the removal of the 40% retention (on foreign currency receipts) and Valued Added Tax on domestic tourists. The latter will still need to be adjusted to zero rating instead of the current set up.

FM: Tell us about licences?

FC: The issue of licensing remains a thorn in the flesh as this has a remarkable bearing on our operational costs. These have to be reviewed to help the sector attract more visitors and clients by providing a cheaper destination. We believe if the challenges are addressed we are able to focus on marketing the destination and growing arrivals into the country. We need to embrace the fourth industrial revolution more and make use of technology to make money for our businesses.

FM: What other challenges are facing the industry.

FC: What most businesses face is the erratic power supply that leads to no signal in properties. Connectivity is key in operating online. Green energy comes to the fore with long-term investments in solar energy. The association is working in partnerships in helping operators access funding. We are looking at options that can be availed to members, which will go a long way in securing alternate energy to remain connected.

FM: What keeps you awake at night?

FC: The huge opportunities that we have as a country get me excited. Skills gaps are our biggest headache, which will take a collective effort. There are numerous factors that have and will reshape the hospitality space.  Pent up travel will see more travel across generations after all restrictions globally, solo travellers will trend. Digital presence will be a driver of a new traveller.

Another top trend is cultural tourism with travellers wanting to explore and experience other cultures.

In 2020/21, there was a 45% growth in visiting friends and relatives (VFR), according to the Zimbabwe Tourism report, which translated to 2,3 million trips made from a total of 6,8 million across all segments. That shows the significance of domestic-related travel waiting to be harnessed.

Recent Posts

Stories you will enjoy

Recommended reading