Covid-19: State losing millions of shillings in catering levy

Monday March 30 2020

The Ole-Ken Hotel in Nakuru Town. The facility was closed down on March 25 owing to coronavirus pandemic. PHOTO | FRANCIS MUREITHI | NATION MEDIA GROUP


The government is set to lose millions of shillings in catering levy as many hotels in Nakuru and Naivasha towns close down.

The closure has been occasioned by coronavirus pandemic which continues to disrupt hospitality industry.

About 1,541 hotels and restaurants in the region pay two per cent of their gross sales as catering levy which translates to hundreds of millions in a month.


According to the chairman of Nakuru County Tourism Association David Mwangi, the government will also miss its target in Pay As You Earn (PAYE) and Valued Added Tax.

 “A hotel like Empolos which is the newest entrant in the hospitality industry in Nakuru County pays about Sh300,000 as VAT and this money will now be put on hold for indefinite time,” said Mr Mwangi who is also the hotel's general manager.

The fate of more than 30,000 employees hangs in the balance as the pandemic challenges loom.

It is now emerging that major hotels in the region cannot survive without conferences as many are now shutting down.

Nakuru hospitality industry thrives on conferences and many organisations and government agencies have cancelled meetings that were lined up in the first quarter of the year.

Mr Mwangi noted that unlike hotels in the coast region which depend on beaches and those in Maasai Mara that depend on bushes, Nakuru hotels rely on conferences to generate income.


“The meetings have been cancelled as government enforces social distancing guidelines and this is a big blow to our hospitality industry,” said Mr Mwangi.

Mr Mwangi revealed that most hotel owners were shutting their businesses down due to the high cost of running the facilities.

“Most of the hotels have a workforce of between 50-220 and it is extremely hard to maintain such a big workforce,” said Mr Mwangi.

Ole-Ken Hotel closed on March 25 and sent its more than 50 workers home.

The closure of the hotel, which opened its doors to the public in 2017, is not only bad news to workers but it is also sad news to farmers supplying fresh produce to the hotel.

The six-storey 40-room facility on Nakuru’s West Road is one of the hotels targeting high end clients in the lucrative hospitality industry that had been booming before it was abruptly disrupted by the covid-19.

A notice pinned at the entrance of the hotel and addressed to employees and clients read: “Due to coronavirus pandemic, we would like to state that the hotel has temporally ceased all normal operations and is currently not accepting room, restaurant, bar, meetings, events and any other form of reservation until further notice.”  


The statement signed by the hotel managing director added: “We will continue to monitor the developments of the pandemic. We are taking every measure possible your wellbeing and safety.”

Other hotels that have closed down include Sarova Woodlands, East Mark and Hill Court Hotel. Others which are contemplating closing down include Tidys Hotel and Merica Hotel. Hotels like Empolos Hotel are operating with a lean staff.

“We are still holding on for a while as we are still receiving few guests,” said Mr Mwangi.

In Naivasha, Kongoni Hotel has shut down while many are in partial shutdown.

“The sizes of land where most of the hotels in Naivasha sit is vast and [they] have retained several grounds men to maintain the landscape,” said Mr Mwangi. He urged the hotels to prepare for a post-coronavirus era.


“I am encouraging all our members to start planning for a post- coronavirus period and have a strategic plan whether we close for a month or two as the landscape will eventually change,” said Mr Mwangi.

The official urged the national government, county governments and other organisation to pay the hotels their outstanding dues running into millions of shillings.

“We need this money so that we can pay our suppliers as we wait to bounce back into operation,” said Mr Mwangi.