The story behind the closure of hotels in Rwanda
Written by: George Kalisa
Wednesday, May 23rd, 2018, 10:07
Rwanda is a country abundant with exciting contrasts. Early this year, the Rwanda Governance Board (RGB), launched a crackdown on churches and mosques that were falling short of the minimum infrastructural and hygienic standards. Some lacked sound proof gadgets and were thus guilty of promoting noise pollution while others were operating in makeshift structures like tents with no pit latrine and water in their premises. At the end of the inspection nearly 6,000 churches and 100 mosques had been temporarily closed.
On the other hand, dozens of refurbished hotels meeting the minimum standards of Rwanda Development Board (RDB) have voluntarily closed in the last five years. Guests who visited the hotels on the postmortem list would fairly perceive the meaning of paradise and bliss. In brief, they found them a perfect second home.
Many out there would think just like I had thought that their fate was linked to tax evasion. But, there was no public auction and link of that kind. Shockingly, after putting a foot into the story, I discovered that my unscientific conclusion would win me a free ticket to hell for jumping to wrong conclusions.
Much as the hotels in Rwanda are mushrooming the number of hotels that find their exit from the Hotel sub-sector annually is big enough to attract concern.
A visit to the City of Kigali and two secondary cities of Rubavu and Rusizi that seem to be enjoying more economic advantages that accrue to their geographical location and tourist attractions led to new findings related to the closure of hotels, which are the direct contrast of what I had earlier thought.
A one-and-a-half year survey completed early this year in Rusizi, Rubavu and the City of Kigali indicates that at least 20 hotels had either been permanently or temporarily closed in the last five years. The survey uncovered a considerate number on this list voluntarily closed.
Paradise Hotel in Rusizi, Peace Land Hotel and Sun Rise of Rubavu. Top Tower and Alpha Palace Hotels appear on the list of hotels that exited the sector in the last five years. Some permanently closed while others suffered temporary closure. For instance, Ten-To-Ten Hotel in the heart of Rusizi closed permanently and KEHEDA Hotel currently occupies its premises. Kivu Park Hotel on the shores of Lake Kivu adjacent New Tam Tam BIKINI Ltd Beach and 3B Hotel near ULK in Rubavu District closed permanently as well.
In a liberalized economy like Rwanda entrance and exit into a business would not be news as the two are largely determined by forces of supply and demand. But, the circumstances under which the hotels met their fate are more or less the same, is what attracts huge concern by several stakeholders in this sector.
Experts I talked to in the hotel sub-sector blamed the trend on factors ranging from limited financial literacy, over ambitious plans, poor management to critical gaps in service delivery. They also cited limited skills in hospitality by some service providers, aggravated by ignorance of a considerate portion of customers related to stereotype attitudes in the service sector. Hospitality savvy researchers said showing appreciation by tipping the service provider creates great impact on the quality of services and/or expressing dissatisfaction by complaining through suggestion boxes or directly to an employee who has fallen short of the customer's expectations.
“Until customers learn to appreciate the services given to them by either compliments or giving tips the motivation of people in the hospitality will always keep low,” observed Diogene Karangwa during an interview at Classic Hotel in Kigali last year.
Karangwa is a former lecturer at the University of Tourism, Technology and Business Studies (UTB) in Kigali. He is a consultant in hotel operations and customer relationship management.
He further apportions blame on customers' indifference and mindset that make it difficult for the service providers to know whether they have impressed their guests or not.
“Rwandans in particular are generally always reluctant to express their feelings; positive or negative – they conceal everything in silence and will restrain their anger even in the face poor services,” Karangwa said.
Karangwa says service providers were slow and calls on every Rwandan to own the responsibility if we are to see a positive change soon.
“People [service providers] are slow in the process of changing service delivery we've to own that responsibility,” he notes.
The hospitality expert says people fear to visit hotels in preference to small joints and restaurants, adding that the problem was not linked at to citizens’ purchasing power but insufficient information about hotels. “It's not the money; they prefer small joints and restaurants- it's the mindset not the money”
Karangwa apportioned substantial blame on Hotel owners and managers for employing relatives a syndrome that greatly compromises quality services, adding that the relatives in most cases lack the qualifications and skills required for a competitive sector. He says such service providers respect the managers rather than the customer who is the key person to the business.
“I don't really appreciate, treating the customer as a king is really a challenge in Rwanda – managers are more respected than the customers when the managers are present the hotel attendants do the work well,”
Dr. Herman Van Boemmel, Head of Macro Economics Advisor at GIZ Rwanda in a parallel interview with this reporter during the recent EPRN 3rd Annual Conference at the College of Business and Economics says both property developers and hotel owners face the same challenges traced to the prices and over optimism. He advised that they should be flexible with the charges.
“Prices in hotels are high, not flexible ...hotels should know low seasons and re-orient prices to match the market conditions and increase in the Rwandan context....they (charges) need to be attractive to attract more customers,” Dr. Boemmel advised.
Mr. Janvier Murenzi, the Vice Mayor in charge of Economic Development in Rubavu District blames the unstable operations and closure of hotels on inappropriate and inadequate business plans, unfinished infrastructures and failure to service bank loans.
“Those that have closed had not been completed. It’s also a problem of loans and lack of proper business plans – if you make a wrong business plan you’re bound to fail,” observed Murenzi.
A security guard, the only worker I found at Sun Rise on April20 who spoke on conditions of anonymity said the hotel had been changing investors and closing and reopening in short intervals as a result of poor management. He further intimated that the hotel had just been bought by the association of the Business Community of Rubavu and they were renovating as the search for a potential investor was going on.
“Sans Kilo, Francois and Haguma oversee it and their association bought it recently,” he said after I had presented my press card.
Fred Sibomana, the Manager of Peace Corner Bar & Restaurant along the road to Petit Barrier (small border post) at the DRC-Rwanda border post says since they opened shop in 2007 he has seen several hotels and restaurants closing. He blames some investors for being over ambitious and obsessed with getting abnormal profits in a short time hence meeting frustrations.
“Some were over ambitious and invested huge capital especially at the time Rwanda hosted CHAN, many investors entered the hotel sub-sector and after Africa Nations Champion (CHAN) things were not in their favour,” said Sibomana.
Nicodemus Wafula, Manager of Gorilla Hotel in Rubavu says most victims had secured big loans which they mismanaged and eventually failed to service.
“Management was a big problem for most of the hotel managers. They got loans from commercial banks which they failed to service and the banks had to auction their properties,” observed Wafula in a phone interview last year. He said some managers and property owners misallocated the loans.
“Others instead of using the loans for the right purpose were lost in excitement and bought posh cars and/or invested them in luxurious weddings or went partying with bank loans hence the businesses could not be sustained,”
Wafula, the hotel manager who has stood the test of times stresses that some people enter business with hardly any plan and attributes the demise of some hotels to lack of planning.
Early 2017 RDB in conjunction with the RSB trained abattoirs and hotel service providers in an effort to help them acquire set standards and become competitive in the region.