Addis Ababa Hotel Owner’s Trade Sectorial Association requests the national bank for a policy decision for commercial banks to extend the loan repayment period.
Ever since the first case of COVID-19 was reported in March 2020, hotels have been facing a drastic fall in room occupancy rates, while the income of businesses involved in the industry dried up due to decline in the number of tourists. Thus the hospitality industry players requested the government for a provocation package that can help them rescue their businesses and retain their staff at these trying times since travel restrictions, flight disruptions, social distancing and lockdown directives have brought down the local hospitality industry to its knees.
Therefore the government decided to support hotel owners and tour operators who sought government assistance to withstand the severe impacts of COVID-19 which brought the hospitality industry to a standstill.
As a result, the government decided to provide loans for the hotel and tourism sector. Accordingly, the government has been able to lend 3.3 billion birr for six months from June 2020, despite the hotels request of 6.6 billion birr for one year.
“Although the government’s move saved the sector at the time, the threat to the hotel sector remains unresolved unless the loan term is extended,” said Aster Solomon, President of the association. Hotels are still in danger if their repayment period is not extended as they already have loans for construction and other purposes other than the Pandemic Rehabilitation Loans.
“Even if lenders understand the problem of hotels and want to extend the repayment period, they will not be able to do so without a directive from the National Bank of Ethiopia,” Aster explained.
As Aster said, after doing the necessary assessments, the association has written and submitted a letter to the National Bank of Ethiopia that shows hotels are facing a national crisis, “To this end we are yet to receive a response,” the president of the association said.
“We have requested the government to avail loans, and postpone the loan repayment in order to keep the hotels afloat,” stated Aster.
“Commercial banks have understood the difficult situation that the hotel and tourism sector has found itself in. Likewise, the Addis Ababa City Tourism Bureau is also working to find a way to support the association,” Aster expounded on the matter.
As the hotel industry, both here and globally continue to recover from the hard hitting pandemic, most if not all hotel industries are operating in nil profits with their revenues dwindling drastically. The hotels are not making profits at this difficult time and are thus not able to repay their loans which could increase the non-performing loan of banks which could result to the closure of hotels.
So it would be commendable if the banks can relieve them of loan repayment, reduce interest, and the government to provide assistance to the hospitality industry and failure to do so can prove catastrophic for the industry.