The Euro zone crisis and security risks have eroded profits for hotels and lodges company TPS Eastern Africa, which has posted a 35 percent drop in its profits after tax for the last six months.
TPS Eastern Africa net profits declined to Sh120 million in the last six months from Sh185 million over a similar period last year, impacted negatively by media reports and travel advisories that reduced the number of tourists into the country from traditional source markets.
“The business was supported by the Eastern Africa domestic tourists and other non-traditional markets like China, Scandinavia and Thailand,” said TPS in a statement Thursday.
TPS, which is well known through its Serena Group of hotels, said the US and other Western governments travel advisory warnings about terrorist attacks in Kenya had eroded their profitability.
Kenya crossed over to Somalia in October 2011 in pursuit of the Al-Shabaab militia that it accuses of a series of kidnappings especially in the coastal region.
TPS also said the volatile economic environment in East Africa characterised by inflationary pressures associated with increased energy and interest costs affected business negatively. The group’s interest costs increased 51 per cent to Sh63.9 million from Sh42.4 million in a similar period last year.
However, the group has its thumbs up for the Tanzanian market, saying it expects a positive performance from the region between July to October.
"The forecast business outlook for the peak season from July to October (for east Africa) is at healthy levels", TPS said in the statement.