Hospitality sector reels under Covid-19 effects

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Bereng Mpaki

LESOTHO Hotels and Hospitality Association (LHHA) says many of its players need an extension of debt relief measures to deal with the economic effects of the Covid-19 pandemic.

In April this year, former Prime Minister Thomas Thabane implored financial institutions and other organisations to put in place short-term economic concessions to assist the private sector in shouldering the economic impact of the pandemic for a period of three months.

These debt relief measures included among others moratoriums for loan repayments, extension of additional credits and tax holidays.

Most financial institutions began implementing the economic concessions from May 2020, and this means that the moratoriums will lapse this month.

However, LHHA president ‘Marethabile Sekhiba told the Lesotho Times on Monday that the hospitality sector was reeling from the negative effects of the Covid-19 pandemic with over 700 employees facing unemployment.

The LHHA estimates that its 80 members employ about 2 000 people.

Ms Sekhiba, who is also the managing director of Scenery Guest Houses said many businesses were struggling with reduced cash flow and production challenges due to the reduced arrivals of tourists in hospitality establishments since the government imposed a lockdown from 30 March to 19 May 2020.

“The hospitality sector is perhaps the hardest hit sector as it has not been operating at optimum levels for over three months with many enterprises struggling with low cash-flow,” Ms Sekhiba said.

She said the sector thrives mainly on international tourists who have been unable to visit the country due to movement restrictions across the world.

She said services such as accommodation, gaming, leisure and workshops have been curtailed as a result of the Covid-19 pandemic.

Ms Sekhiba said going back the normal way of servicing financial obligations for hospitality enterprises would be difficult under the prevailing circumstances.

“The three months’ period end this month and reverting to the normal payments system is going to be a challenge as businesses have not yet recovered. If anything, the business situation has worsened over the past three months more than when the lockdown began.

“So, the economic concessions will need to be extended to ease the lingering financial crunch as a result of the Covid-19 pandemic.”

She said the uncertainty over when the pandemic is likely to end has compounded the situation.

For his part, Molefi Leqhaoe, the chairperson of the Bankers Association of Lesotho (BAL) and Lesotho PostBank’s managing director said the hospitality enterprises must approach their respective bankers and discuss their challenges.

“We are aware of the hospitality sector’s difficult situation and I believe what they must do is approach their bankers individually to negotiate extensions where necessary because each client’s situation is unique,” Mr Leqhaoe said.

He said in the case of PostBank, they have given some of their clients from the sector debt relief measures that are longer than three months.

He warned however, that caution should be exercised when considering extensions because there are financial implications for both the clients and the bankers.

“The longer the extension, the more expensive the loan servicing will be and as for bankers, their ability to honour their financial obligations when other clients need them may be negatively affected in the long run,” Mr Leqhaoe said.

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