Africa: ‘Pilolo’ and efforts to leapfrog Ghana’s hospitality industry Pilolo’ Hotels
In the game of ‘pilolo,’ a revered childhood outdoor game where players look for a hidden person or object in a search and find competition; players in the hospitality industry are also in persistent search of cutting-edge remedies that would leapfrog the fortunes of the sector to respond adequately to its billing.
The sector had been touted by industry connoisseurs as having the potential to out-stage Ghana’s primary commodity earner, cocoa, in terms of foreign forex computations, when carefully planned and re-engineered.
The tourism sector, which the hospitality industry dovetailed into could be the game-changer in the dynamics of uplifting the economy to an acceptable limit and open up job avenues for the unemployed youth.
The country has consequently unveiled a 15-year long term tourism plan that seeks to increase the annual number of tourists to Ghana from one million to eight million per year by 2027.
Ghana’s travel industry is projected to raise $ 8.3 Billion a year by 2027, plus associated benefits, according to that plan.
Government has the intention to pass a law that would synchronise all tourists sites under the management of the Ministry of Arts, Culture and Tourism, by exploring public, private financing models.
Indeed, the hospitality sector needs to take charge of its share of the industry earnings, but currently blighted by multiple taxes and levies, depriving it of freeing itself from these shackles.
A recent ranking study conducted by STR, an American company that tracks supply and demand data for multiple market sectors, including the global hotel industry, copied to the Ghana News Agency, declared Ethiopia and Ghana as topping the list of African countries with highest hotel room rates.
Between July 2018 and June 2019, Ethiopia’s Addis Ababa city ranked first, posting the continent’s highest average daily rate (ADR) of $163.79, while Accra area in Ghana came second posting an ADR of $160.34 and Lagos Area in Nigeria placing third with a rate of $132.51.
It said but when it comes to hotel occupancy rates, Egypt’s Cairo and Giza were the leaders at 74.5%. Cape Town Centre in South Africa placed second with 65%, followed by Accra Area with 59.7% placing third.
Africa has many historical and tourist attraction sites, making it a must visit place globally. Even for Africans traveling to other African countries is an encouraging idea, just to know the continent better. But what drives many tourists crazy, both local and foreign, is accommodation rates in Africa.
Many hotels charge over $100 for a night in hotels not even up to a two-star level. It is just very expensive for ordinary travellers to secure a place at a hotel during their visits.
The current situation frustrates many Africans, though but not many African governments are able to deal with accommodation crisis in their countries.
Mr Alexander Nketiah, Volta Regional Director, Ghana Tourism Authority (GTA), reacting to the study conceded that plethora of taxes, levies and fees as well as high utility bills contributed to escalating hotel room rates in the country and other African jurisdictions, which are labelled as ‘high cost destination countries’ in the hospitality industry.
He said regional average occupancy rates were hovering around 30-50% when the national figure is pegged at between 60-65 per cent.
“A few of the hotels are doing well but frankly speaking majority of them are reeling under severe hardship.”
He said business is not booming at the occupancy and accommodation level but indicated that other segments of the sector, such as fashion, car rentals, arts as well as historical and tourists attraction sites, were generating high numbers and accompanying revenues at the expense of room occupancy.
He said there was therefore huge disconnect between the high visitation numbers that the country is witnessing against room occupancy.
Secretary of the Volta Regional Hotels Association, Mr Godwin Morkli confirmed that utility bills and over-abundance and multiplicity of taxes were responsible for the high room rates in the country, saying that, “as much as twenty different taxes, levies and fees are imposed on the hotel business alone.”
He mentioned some as the taxes and levies coming from the Ghana Revenue Authority as corporate tax, EPA, GTA levy, Municipal Assembly tax, property tax, Value Added Tax, with others coming from the Food and Drug Authjority and the Ghana Standards Authority.
Mr Morkli called on duty-bearers to synchronise all the taxes into a one-time payment regime to make it easier for them to comprehend rather than, what pertains now.
“The tax user-fee synchronisation will help us plan ahead, lessen our plight and accord us the opportunity to hire quality hands and pay rewarding salaries.”
Mr Morkli said the Association members pay between GH¢300.00 and GH¢1,500.00 as salaries, from security, cleaners to supervisors, managers, chefs and matrons.
Mr Godwin Baku, Administrator, Freedom Hotel, Ho, told the Ghana News Agency that its Management spends GH¢50,000.00 averagely on electricity per month and additionally up to GH¢35,000.00 on water bills in every four weeks.
“Utility bills are killing our business and eroding all our gains.”
Mr Stevie-Derrick Armah, Manager of the three-star, Volta Serene Hotel said on the average, “we pay GH¢120,000.00 for electricity alone,” with the numerous taxes and levies staring us in the face and affecting standards, investment and resulting in huge disincentive.
He said in South Africa, two per cent of taxes collected from hoteliers are ploughed as investment into the sector, yelling, “these taxes are crazy, crazy and crazy.”
Mrs Mariam Adzroe, Founder and Director, ERIJEM Institute of Floral Design and Culinary Art, said products of the School, who directly feed the hotels in Ho, with students graduating with National Vocational Training Institute (NVTI) certificate One and Two and are entitled to salaries between GH¢700.00 to GH¢1,000.00, but the market forces are redefining these to the detriment of graduants.
In a recent documentary on best places to travel to in 2019, Ghana was ranked fourth. The list, collated by Cable Network News channel, CNN Travel, describes Ghana as the West African nation of economic success and political stability.
The contribution of tourism to the Ghanaian economy cannot be over emphasized. The World Travel and Tourism Council in a report in 2017, highlighted the impact of the sector on Ghana’s Gross Domestic Product (GDP) and on job creation.
The sector accounts for 10.4 per cent of global GDP and 313 million jobs, or 9.9 per cent of total employment, in 2017, the report said.
The report noted that, the total contribution of tourism to GDP was GH¢12,573 million (USD 1,335.5 m), 6.2 per cent of GDP in 2017, and it is expected to rise by 4.2 per cent to GH¢19,852 Milion (USD 4,522 M), 5.7 per cent of GDP in 2018.
On job creation, it said the sector’s contribution to employment, including jobs indirectly supported by the industry was 5.3 per cent of total employment (882,000 jobs). This is expected to rise by 16 per cent to 807,000 jobs in 2028 (4.8 per cent of total).
The country has improved on the ease of doing business in 2018, according to the World Bank Group 2019 Doing Business Report-Training for Reform, with Ghana improving on its ranking from 114 out of 190 economies, up six places from 120 in the 2018 Doing Business report.
I think that the ‘pilolo’ search game has been well enjoyed by the players and it is believed the government would give a listening ear to the plight of the industry actors by evolving crunch strategies to give respite to hotel businesses and at the same time synchronising taxes, levies and fees payable.
African governments, including Ghana should brainstorm the high hotel rates to stem the tide.
The killing utility bills, which appear to be kicking the sector at the knee need urgent government attention and ploughing a percentage of taxes for reinvestment could be the nestle to hold the golden eggs. Yes, ‘Piloloooo’, well served.
By Maxwell Awumah