Business

Hoteliers: SRC guidelines a threat to our industry

Tuesday, June 11th, 2024 03:45 | By
SRC Chairperson Lynn Mengich
Salaries and Remuneration Commission chair Lyn Mengich during a past function. PHOTO/Print

The hotel industry at the Coast is on the brink of collapse, with industry players attributing this to the devastating effects of new guidelines implemented by the Salaries and Remuneration Commission (SRC).

Since the enforcement of the SRC guidelines in August 2023, which restrict the payment of Daily Subsistence Allowances (DSA) for public officers to distances of more than 50km, local hoteliers have experienced a significant downward spiral in business.

Chairperson of the Kilifi South Hotels and Restaurant Association (KISHRA) Michael Mwiha stated that the enforcement of the guidelines has dealt a severe blow to facilities in the region, leading to substantial business losses.

“We have lost businesses and employment opportunities have dwindled. We have been forced to send some staff home because when the facilities can’t sustain the business, there is a ripple effect that directly impacts employees. Many facilities are struggling to remain operational,” explained Mwiha, who is also the General Manager of Mtwapa Country Resort.

Hurting wage bill

The SRC’s decision, aimed at reducing the wage bill for government employees, has had unintended negative consequences for the hospitality sector at the Coast that largely depends on conferencing tourism.

The directive from SRC chair Lyn Mengich, dated August 7, 2023, stipulates that public officers are not eligible for DSA if meetings or retreats are held within a 50km radius of their duty stations. Additionally, allowances for retreats, sitting committees, task forces, and daily subsistence for both local and foreign travel have been suspended.

“Through this implementation we are seeing a situation whereby most of the facilities might be closing very soon if not immediately because in Mombasa and Coast at large we depend on conferencing tourism which is both locally and in the national level. So when one wing is killed it means source of revenue is outomatically killed,” Mwiha noted while noting further  that the new SRC rules have not only disrupted hotel operations but also affected suppliers, causing financial strain on local economies.

Mwiha and his colleagues are calling on the government to urgently review the SRC Act of 2011 to create a more equitable environment for the hospitality industry. “If the government does not reconsider these punitive regulations, many hotels will be forced to shut down,” he warned.

Looming auctioneering

The financial instability has left many establishments at risk of losing their properties to auctioneers due to mounting debts. Conference tourism, which heavily relies on bookings from parastatals like the Kenya Ports Authority (KPA) and Mombasa County Government, has seen a sharp decline in Mtwapa. The stringent SRC guidelines have redirected this vital business to other regions, particularly Naivasha, further exacerbating the situation for Mtwapa hotels.

“We urge the national government to prioritize tourism-dependent areas like ours for holding conferences,” Mwiha added.

Chocking bureaucracy

KISHRA secretary Yvonne Ayieko highlighted additional challenges posed by the bureaucratic processes for foreign travelers, further hampering the region’s hospitality sector.

“Despite submitting a letter through our lawyer on behalf of 72 establishments, we have yet to receive a response,” she observed.

She called on local MPs to address this issue in Parliament to seek a fair resolution for the affected businesses.

“Investors have poured their resources into these businesses to create jobs, and now, due to unfavourable government policies, people are losing their livelihoods,” she lamented.

As Mtwapa’s hospitality sector faces potential collapse, industry stakeholders are pleading for immediate government intervention.

“If this 50km rule is not revised, we will see an increase in crime rates as businesses close and unemployment rises,” Ayieko warned.

Hoteliers are appealing for swift action to stabilize the sector and ensure the economic vitality of the region.

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