NAIROBI, KENYA, AUGUST 15 ― TPS Eastern Africa (Plc), the managers of Serena hotels have reported a Ksh168.6 million loss for the six months to June, blamed on low international tourist arrivals to the East Africa region during the period.
This coupled with high operating costs including the cost of energy denied the hotel chain profits, the company has said.
According to Serena, the foreign leisure tourism segment in East Africa witnessed a slow growth in business levels, but remained positive compared to last year.
“The results for the period have been impacted by lower than expected sales from foreign leisure tourism arrivals in Kenya during the first quarter and the unexpected increase in energy and other operating costs,” the Nairobi Securities Exchange listed firm said in its financial statement.
This is however a 10.7 per cent reduction on its loss from Ksh188.8 million reported in the same period last year.
Net sales closed the six months at Ksh2.7 billion slightly higher than Ksh2.6 billion last year but the gains were weighed down by operating expenses, as the company continued with facility upgrades in Nairobi Kenya.
TPS Eastern Africa is however positive on the remainder of the year owing to the traditional high seasons of July-August and the September to December stretch.
“Given the seasonal nature of the tourism industry in East Africa, the results for the first half of 2018 should not be taken as a basis for forecasting a full year’s result,” the firm stated.
According to the company, its diversified portfolio in East Africa recorded satisfactory growth in the corporate and domestic leisure segments, particularly during the second quarter of 2018 after the political environment in Kenya stabilized.
The commencement of direct flights by Kenya Airways to and from New York from October , resumption of Air France flights to Nairobi and the granting of additional flight frequency of Ethiopian Airline to Mombasa from July 2018, are also expected to have a positive impact on the hotel industry, Serena has affirmed.
“Based on the feedback received from our suppliers of business in traditional and new international source markets, there is increased interest in selling destination East Africa. Current forecast indicate satisfactory outlook during the second half of 2018 for Serena Kenya, Serena Tanzania and Serena Uganda,” the firm said.
Serena has in the recent past been refurbishing its facilities in East Africa, increasing capacity while giving them a new look.
In its half year results statement, the company said the new and refurbished facilities at Kampala Serena Hotel and Dar es Salaam Serena Hotel that were completed in the course of 2017 have contributed positively during the first half of 2018.
“The first phase of the development of Nairobi Serena Hotel will be handed over in August 2018 and consequently the board is optimistic that the last quarter of 2018 will record improved performance following completion of the ball room, new restaurant and an executive lounge which will generate additional revenue,” it said.
The award of a management contract in the Democratic Republic of Congo will further strengthen the Serena brand with the opening of Goma Serena Hotel in early 2019.
Meanwhile, the company has lauded the East African governments for facilitating continuous resource allocation required to improve the business environment for destination East Africa.
“Notwithstanding the challenging business environment, the board and management looks at the future with optimism,” the TPS Eastern Africa board said.
It said the Group continues to implement appropriate Human Resource Management practices and sound Corporate Social Responsibility (CSR) programmes that complement its long-term business strategy.
“ The CSR programmes remain fully aligned to achieving the Sustainable Development Goals (SDGs) set out by the United Nations Development Programme. Our sustainable business practices continue to respond to the needs of eco-tourism, environmental conservation, reafforestation, education, public health and essentially community development,” the company said.
The board of directors has not recommended the declaration of an interim dividend this year.
TPS manages 15 hotels and resorts across East Africa under the Serena brand name.