(Bloomberg) — Travel warnings have been lifted, Kenya’s government says U.S. President Barack Obama’s visit last month shows travelers are safe and the World Tourism Organization agrees. Still, foreign visitors are staying away.
For decades, the white sandy beaches and warm blue waters of Mombasa and other resort towns along Kenya’s coast have attracted mainly western holidaymakers. Now the $1-billion-a- year industry is struggling to recover after a series of attacks in the past two years by Islamist militants loyal to the al- Shabaab movement in neighboring Somalia that killed more than 500 people.
“Business is still very low,” Tuva Mwahunga, general manager of the Serena Beach Hotel in Mombasa owned by TPS Eastern Africa Ltd., the region’s biggest hotel chain, said in an interview Aug. 10. “We’re at 26 percent occupancy. With this we can’t continue. We’ve had to stop contractors and part-time staff.”
Kenyan companies that rely on tourism are losing money. Kenya Airways Ltd., sub-Saharan Africa’s third-biggest carrier, reported the country’s biggest ever corporate loss last month of 25.7 billion shillings ($248 million) in the year through March. TPS also posted a first-half loss. The number of foreign visitors to the country dropped 19 percent in the first half to 347,398, according to Kenya National Bureau of Statistics data.
Tourism is Kenya’s second-biggest generator of foreign exchange after tea exports and the decline in revenue has undermined the shilling, which has dropped 14 percent against the dollar this year. The government has offered tax incentives to encourage local tourists and hired London-based public relations company Grayling UK Ltd. to help improve the country’s international image.
That’s provided some respite to companies such as Germany’s Severin Hotels, which owns the Severin Sea Lodge in Bamburi, about 10 kilometers (6 miles) north of Mombasa. Occupancy this month at the sea-front resort is about 40 percent, said General Manager James Owiti.
“It’s actually better than last year,” he said. “It was so bad last year because not just the international tourists but the local residents were afraid to come to the coast.”
Visitors have been frightened by the series of attacks in Kenya since Islamist militants stormed the Westgate mall in the capital, Nairobi, in September 2013. The raids included one in Mpeketoni, near the coastal resort town of Lamu, in which at least 60 people lost their lives.
At least 516 people have died in “terrorist incidents” in Kenya since Westgate, according to Bath, U.K.-based risk consultancy Verisk Maplecroft.
Some hotels, such as the Twiga Beach resort in Malindi, 120 kilometers north of Mombasa, have closed. The company, which hosted mostly Italian tourists, was forced to shut in March and fire 100 staff because its 65 rooms remained empty.
“It’s a mixture of security and the Italian economy being very down,” owner Giovanni Forino said in a phone interview. “We are hoping to reopen next month, but business is not good.”
Insecurity in Kenya has repeatedly damaged the tourism industry. In 2008, KNBS data shows that 721,566 tourists visited Kenya, 1.1 million less than the previous year after at least 1,100 people died in violence following a disputed presidential election.
Tighter security measures by the authorities since Westgate resulted in fewer attacks, with 31 carried out so far this year compared with 94 in 2014, according to Verisk Maplecroft.
That’s not enough for TUI AG, Europe’s largest tour operator, to reverse its decision in May 2014 to cancel flights to Mombasa. The company has no plans to reintroduce flights, spokesman Kuzey Esener said by e-mail on Aug 14.
Thomas Cook Group Plc, Europe’s second-biggest tour company, said it’s seeing some increase in demand from German tourists for Kenyan trips, “albeit still from a low level,” said spokesman Mathias Brandes.
While the easing of travel advisories by countries including the U.K. will help revive the number of visitors, it’s going to take time, said TPS’s Mwahunga.
“The travel ban has been lifted but the effect is still there,” he said.
–With assistance from Richard Weiss in Frankfurt.
This article was written by Ilya Gridneff and Joseph Burite from Bloomberg and was legally licensed through the NewsCred publisher network.