Blog Archive

Tuesday, January 15, 2008

The carnage continues... Tourism sector

I want to highlight listed firms in specific sectors to see how they have been affected by the current instability in Kenya...

Tourism - TPSEA & KQ

KQ
  • Loss on inbound traffic into Kenya esp from Europe. KQ opened route to Paris in 2007 but it seems doom & gloom. The drop in passengers is frightening.
  • Competition has pummeled KQ on the LHR-NBO sector. Add the clashes & it gets worse during KQ's "profitable" Jan-Apr period.
  • Many N.Americans (2nd largest tourist market) have stopped flying to Kenya.
  • KQ has suspended the LHR-MBA route since there are few tourists willing to come to Kenya on holiday. The Jo'burg-MBA sector has been suspended as well. Therefore, all flights have to pass through NBO.
  • Weaker KShs means higher fuel & interest costs.
  • KQ's saving grace are the W.Africa bound passengers.
  • High oil prices makes it worse. All airlines will suffer (except the Mid East).
  • If peace prevails, then KQ will see inbound passengers increase from August 2008.
  • Replacement plane (767) delivery in Oct 2008 to ease current equipment "shortage". The SAABs will be retired.
  • Weaker KShs will "boost" profits in KShs but the break-even factor has increased.
TPSEA
  • Lucky for them, they expanded to include the Tanzanian portfolio of hotels & lodges. Some loss of Kenyan business has transferred to Tanzania.
  • Serena Nairobi is normally 85%+ occupancy at this time. They are at 20%. Yes, only 20%. They are bleeding money.
  • Serena's other lodges are almost empty. Most tour operators prefer the tourists fly but this can be prohibitive to middle-class tourists.
  • Serena Mombasa may be shut down for "renovations" until tourism picks up!

2 comments:

bankelele said...

Bleeding
From the NYTimes:
- Virgin Atlantic, which flies from the US to Nairobi via London, has waived all change fees and is allowing customers to change their travel dates without penalty for up to a year.
- Kenya Airways was offering travelers a full refund for flights canceled 24 hours before departure.
- Fairmont Hotels & Resorts, which runs the popular Norfolk Hotel in Nairobi, is offering to rebook guests to the Fairmont Zanzibar in Tanzania. Travelers booked at the Norfolk later this month may postpone or cancel reservations and receive a refund.
- Continuing unrest could be a considerable blow to Kenya’s tourism industry, which is expected to bring in $900 million and more than a million visitors this year.

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