COVID IMPACT

Travel agents hit hard as 50% businesses close

At least 7,500 jobs have been lost.

In Summary

•The closure of movement in and out of five counties, days before Easter, dealt a major blow to the travel, tourism, and hospitality industry which is hard hit by the pandemic.

•Kenya Association of Travel Agents (KATA) has appealed for moratoriums on bank loan interests owed by travel agents while calling on the government to consider supportive measures for the industry.

Kenya Association of Travel Agents chairman Mohammed Wanyoike/HANDOUT
Kenya Association of Travel Agents chairman Mohammed Wanyoike/HANDOUT

At least 7,500 jobs in the travel agency business have been wiped out in the past year as Covid-19 continues to hit hard the travel, tourism, and hospitality industry.

The Kenya Association of Travel Agents (KATA)is now appealing for moratoriums on bank loan interests owed by its members, to help them  survive through the pandemic period, where travel restrictions have led to near-zero business.

"This will give travel agents the much-needed cushioning from large-scale loan defaults, negative credit rating, and risk profiling, even as they strategise on new ways to balance off their books," KATA chairman Mohammed Wanyoike said in a statement.

The association is seeking the intervention of the Kenya Bankers Association and the Central Bank of Kenya (CBK).

All travel agents have been confronted with huge amounts of refund requests for trips that had to be canceled as a result of lockdowns, border closures, and travel restrictions; activities that have left travel agents reeling from unspeakable financial losses
KATA chairman Mohammed Wanyoike

According to Wanyoike more than 50 per cent of agencies in the country have had to shut down offices and daily operations, send home staff on unpaid leave, with only the owners running the businesses remotely.

“It is only the owners and family members who have now been left to scout for business from home. Even so, there is no business because travel has been disrupted,” Wanyoike told the Star in a telephone interview.

KATA represents over 200 travel agency businesses with a workforce of 15,000 Kenyans.

About 98 per cent of its membership, or 198, are SMEs.

“We urge the government to particularly pay attention to the vulnerable travel industry in the recovery phase, to not only save small businesses but to save jobs as well,” Wanyoike said.

At least 3,000 tour vans belonging to different companies have been grounded, the Star has established.

“Unless we change tune and start focusing on the economy, things are going to worsen,” Twiga Tours CEO Minaz Manji told the Star.

The one-year relief measure by the Central Bank of Kenya (CBK), announced in March last year asking banks to restructure loans, expired on March 2, 2021.

Borrowers were provided with various restructuring options including extension of repayment period, moratorium on principal or interest, and waivers on interest or fees.

“The measures have provided space to borrowers to ride through the pandemic, mitigate job losses and pivot their business models to the new normal,” CBK governor Patrick Njoroge said at the expiry of the terms.

Cumulatively, since March 2020, loans amounting to Sh1.7 trillion were restructured by end of February 2021, CBK data indicates, accounting for 57 per cent of the banking sector’s gross loans.

Following the resumption of repayments and some pay-offs, the outstanding restructured loans as at the end of February amounted to Sh569.3 billion, or 19 per cent of the total gross loans.

“ Over 95 percent of the outstanding restructured loans are being repaid in accordance with the restructured terms,” CBK said when the Monetary Policy Committee met on March 29.

The tourism and travel industry has been counting on the domestic market and little international arrivals to survive.

The Easter holiday was a major deal for the sector, which had reported high bookings for travel and hotels.

The closure of movement in and out of Nairobi, Kajiado, Nakuru, Kiambi and Machakos (zoned as one area) and suspension of domestic air services days before the Easter festivities(March 26 Presidential directive), dealt a major blow to the industry which is the hardest hit over the pandemic period.

This has been worsened by the recent travel ban and advisories by the UK, and the US, which according to industry players, it means zero business from these key markets.

“There are no bookings right now to or from the UK and the US,” Wanyoike said.

According to KATA, the majority of industry players now face the auctioneer's harmer if major interventions are not made, meaning hundreds of businesses are set for closure with thousands of jobs on the line.

Travel agents play a critical role in selling and arranging transportation, accommodations, tours, or trips for travelers, feeding hotels across the country.

Tour operators are the movers of the masses with hotels providing accommodation.

“All travel agents have been confronted with huge amounts of refund requests for trips that had to be canceled as a result of lockdowns, border closures, and travel restrictions; activities that have left travel agents reeling from unspeakable financial losses,” Wanyoike said.