Thursday, March 28, 2024
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Loans weigh hefty for hoteliers

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A dozen of high standard hoteliers in Addis Ababa are working to sell their hotels as a result of not being able to make their loan ends meet.
Despite the Addis Ababa Hotel Owner’s Trade Sectorial Association requesting the national bank for a policy decision for commercial banks to extend their loan repayment period, the plea as it stands seems to be left up in the air.
As Aster Solomon, President of the association explains, only 3 months remain as per the repayment period, and many hotel owners are on their way to selling their hotels as a result of difficulties of repayment. On the flip side, banks are kick starting the process of auctioning off unpaid hotels.
The severe impacts of COVID-19 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.
“The government’s move saved the sector at the time, however, the threat to the hotel sector remains unresolved unless the loan term is extended,” said Aster explaining that 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.
“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.
Operators in the sector recommended that 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 with failure to do so proving catastrophic for the industry.

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