The hospitality industry is rising, but are we keeping up with the opportunities?

If you have followed the hospitality industry in Rwanda lately, then you know that there is a real buzz about what is happening. New hotels are emerging; the national carrier, RwandAir, is expanding its fleet with state-of-the-art planes and even opening new operational routes to other continents; and Rwanda Development Board (RDB) is at the forefront of encouraging Rwandans to actively experience, learn, and share experiences about Rwanda under#TemberuRwanda campaign.

If you have followed the hospitality industry in Rwanda lately, then you know that there is a real buzz about what is happening. New hotels are emerging; the national carrier, RwandAir, is expanding its fleet with state-of-the-art planes and even opening new operational routes to other continents; and Rwanda Development Board (RDB) is at the forefront of encouraging Rwandans to actively experience, learn, and share experiences about Rwanda under#TemberuRwanda campaign.

The hospitality industry, whose backbone is centred on customer service, brings together those who work in Food and Beverages, Accommodation, and Travel and Tourism.The Food and Beverage sub-sector can take the form of restaurants, fast-food eateries, and catering services. Accommodation, on the other hand, represents hotels, bed and breakfast enterprises, and other places that offer lodging. Travel and Tourism, a major segment of the hospitality industry, encompasses mainly transportation and physical touristic attractions.

 

That said, while the hospitality industry in Rwanda continues to grow as recently expounded by RDB’s Belise Kariza, the chief tourism officer, when she observed that the number of visitors have increased, noting that in 2015, Rwanda welcomed over 1.2 million visitors. Likewise, it was reported that the number of visitors have increased since 2013 with the country hosting 19,085 conference visitors in 2014 compared to 15,441 in 2013, an increase of 24 per cent. Similarly, in 2015, conference visitors amounted to 25,932, an increase of 36 per cent compared to 2014. Accordingly, Ms Kariza noted that by the end of this year, Rwanda is expected to have up to 10,000 hotel rooms available, which represents a giant leap from 680 rooms that were available in 2003.

 

So, the question becomes: are we ready to keep up with opportunities deriving from the rising hospitality industry?

 

You see, there are numerous economic benefits of the rising hospitality industry both short-term and long-term. Below I list some of the benefits that can be expected:

Direct Impact

When I talk about direct impact of hotels, for instance, I mean the projected revenues that are generated from hotel rooms, conference rooms, food and beverage, and so on. But, I am also referring to employees who are hired before the hotel is operational and after the hotel becomes operational. Here I can think of those in the construction business as well as hotel staff.

What concerns me is that while such huge projects are taking place (it can take up to five years to complete an upmarket hotel), there seems to be a significant shortage of skilled personnel required to take up opportunities presented by such projects. The New Times recently reported that, at Radisson Blu Kigali, which opened in July this year, up to 85 per cent of the staff are working in a hotel for the first time, which can be a burden to management due to standards expected to be maintained. Of course, you have to commend Radisson for powering through, but other hotels could have easily recruited from Uganda and Kenya, and thereby undermining the element of employment opportunities for Rwandans.

Indirect Impact

The indirect impact the hospitality industry has on sub-contractors and suppliers cannot be underestimated because the benefits are huge and largely long-term. For instance, when a new hotel opens shop, it requires businesses, especially small and medium enterprises, to supply goods and services such as food, beverage, décor, entertainment, and so on. You may think of hotel-room related items like housekeeping supplies, room amenities, ICT services like the internet, and so on.

On initial assessment, although there have been considerable improvements in terms of support businesses, there are still gaps that should prompt concern. Again, referring to The New Times’ report, some hotels have resorted to importing most of their supplies and consumables due to inadequate supply, and in some cases, a complete lack of it, which again, makes you wonder how SMEs failed to prepare to supply consumables like chicken and eggs.

Fiscal Impact

Fiscal impact encompasses taxes that are collected from the development and operations of the hospitality industry. As you may already know, such taxes would be expected to include all sales taxes collected in association with revenues generated as well as staff income taxes. On the hotel side of things, for instance, when you look at the number of hotel rooms that were available ten years ago (680), and compare them to the number of those projected by the end of this year (10,000), you soon realise the potential fiscal impact of the rising hotel sub-sector.

But, of course, a greater positive fiscal impact is dependent on the smooth running of the hospitality industry. Those in management are expected to take a lead in ensuring excellent customer service is continuously provided to ensure customer retention and that new customers are attracted. Failure to do so is not only bad for their business, it has the potential to diminish the fiscal impact on the economy in taxes foregone for example. 

On the whole, the hospitality industry in Rwanda is on the rise, that much is beyond dispute. And while the expected impact on the economy from the rise will be much more than just job creation and additional tax revenue (even though the two elements are of great significance), the hospitality industry also induces the economy by empowering those who earn from it and subsequently spend their earnings in other areas of the economy like housing, schools, healthcare, and so on. The impact is huge.

Going forward, having made it clear that the rising hospitality industry is of great importance to the overall economy; employment opportunities, tax revenues, and supply of goods and services by small and medium enterprises, is it not about time we all took this industry more seriously by adequately preparing qualified personnel to take up employment opportunities, and have SMEs able to supply goods and services?

Of course, we should take this industry seriously by adequate preparation. Benjamin Franklin once said that by failing to prepare, you are preparing to fail. We cannot afford to fail to prepare.

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