Tanzania hotels shaking: Record 60 percent losses

Tourist hotels in Tanzania are facing a hard going in business after government issued a directive to restrict public seminars and conferences at privately-owned accommodation facilities.

With a total workforce of about 400,000 employees, hotels in Tanzania are braving to match with cost-cutting after the government restricted its agencies to book them for conferences and accommodation.

Major hotels in Dar es Salaam and Arusha cities had reported 60 percent losses since last year after the government introduced an 18-percent Value Added Tax (VAT) and US$250 visa charges to business visitors arriving in Tanzania, making this African nation unattractive to hotel investment.

Members from the Hotel Association of Tanzania (HAT) said the hotel industry in Tanzania is currently facing a hard going after the government’s imposed restriction of its business in privately-owned hotels with the introduction of multiple, unfriendly taxes to hotels, forcing their investors to close businesses.

HAT members said the Tanzania government departments and agencies were counted among key partners in hotel business, but, after the government’s move on its cost-cutting exercise, hotels were greatly affected. HAT is an umbrella organization with more than 225 registered hotels across Tanzania.

“Local and international meetings are part of hotel business and which sustain employment and tax remission to the government. Restriction to book these facilities had frustrated our business with staff layoffs,” one HAT member told eTurboNews.

He said the US$250 visa charged to business visitors calling at Tanzania airports and border posts was too high, and restrictive to foreign visitors entering Tanzania for business visits and conference purposes.

Most hotels in major cities depend on conference and business visitors as leading clients, while lodges in wildlife parks are mostly booked by tourists whose entry visa is US$50 for a 90-day stay in Tanzania.

“The government should harmonize charges and multiple taxes imposed on tourist hotels and visitors as to encourage and create [a] conducive environment to hotel operators as to allow them [to] expand their business for more tax collection,” he said.

“This year, [the] annual budget should focus at harmonizing taxes imposed on tourism as to attract more tourist investments,” he said.

HAT members are bitter, saying Tanzania should encourage international conferences and conventions to be held in cities of Dar es Salaam and Arusha with other towns as to raise the hotel industry in this African nation.

Tanzania held less than four local and regional conferences compared with Rwanda which had attracted 35 local, regional, and global conferences up to the end of this year. Rwanda charges US$62 as a multiple entry fee for 90-day stay.

Senior tourism and hotel consultant in Tanzania, Mr. Leopold Kabendera, said big hotels depend mostly on conference and business events to raise their business compared to wildlife lodges which are mostly furnished to accommodate safari tourists.

Data from the Tanzania Ministry of Natural Resources and Tourism shows that Tanzania hotels are operating with a capacity of about 21,929 rooms.

He told eTN that, restriction of public conferences and meetings in private hotels was wrongly placed as it had caused some hotels to close down their business.

Mr. Kabendera said Tanzania should waive hostile taxes imposed on the tourism industry as to attract more tourists.

Two hotels in Arusha, the Mount Meru Hotel and Snow Crest Hotel, are on sale due to shaky business. Mount Meru Hotel, the first and biggest tourist accommodation facility in Arusha, is on sale through international tender by an American auctioneer, Mark Danford.

Several medium-sized hotels have switched to student hostel services other than visitor accommodation to avoid more loss making, while key hotels in Bagamoyo, the beach and historical town north of Dar es Salaam had signaled loss making fears, with some closing their business.

Dar es Salaam City has 242 hotels out of which 177 range from one to 3-star classes, 31 are 4-star and 19 are 5-star class.