Business

Why Are Some Hotels In Rwanda Closing?

Hotels in Rwanda are mushrooming. But Taarifa has leant that there is however a concerning number of hotels that have found their exit from the industry.

The survey we conducted in the districts of Rusizi, Rubavu and the city of Kigali indicated that at least ten hotels have closed doors. These include Paradise Hotel in Rusizi, Peace Land Hotel and Sun Rise of Rubavu. There is also Top Tower and Alpha Palace Hotels that exited the sector in the last one and half years.

In a liberalized economy like Rwanda, it appears, entrance and exit into a business would not be news as the two are largely determined by demand and supply. However, the circumstances under which the hotels met their fate, more or less the same, are what would puzzle several stakeholders in the tourism industry.

Experts in the industry have blamed the trend on factors ranging from limited financial literacy, over ambitious plans, poor management to technical expertise in service delivery.

They have also cited limited skills in hospitality by some service providers, aggravated by ignorance of the considerate portion of customers related to stereotype attitudes in the service sector.

Alpha Palace Hotels

Even simple practices are cited. Hospitality savvy researchers, for instance, 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 fell 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,” Diogene Karangwa observes.

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 difficult for the service providers to know whether they have impressed their guests or not.

“Rwandans in particular are 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 also turns the guns to service providers who he blames for being slow and calls on every Rwandan to own the responsibility “if we are to see a positive change soon.”

“People [service providers] are slow; the process of changing service delivery, we have to own that responsibility,” he notes. The cause, Karangwa suggests one, include hotel staff mistreating customers and on the other side treating their managers like kings.

“I don’t really appreciate this. It seems treating the customer as a king is really a challenge in Rwanda – managers are more respected than the customers when the managers, he says.

Other expert say people fear to visit hotels in preference of small joints and restaurants, that the problem is not linked to the country’s purchasing power parity, but insufficient information on what the hotels offer. “It’s not about the money; it is the mindset,” says Peter Mukulu, the marketing Manger of Marriot Rwanda.

Marriott Hotel: Photo by George Baryamwisaki

Marriot Hotel is one of the new entrants in the market. It offers world-class services in accommodation and other hospitality service at affordable rates, but customers are still reluctant to step into the hotel’s compound.

However, there is a twist. The industry faces something fundamentally complex to deal with. And that is pricing. And planning and forecasting.

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 said.

Meanwhile, Nicodemus Wafula, the Manager of Gorilla Hotel in Rubavu district says most victims had secured big loans, which they mismanaged and eventually failed to service them.

“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,” Wafula observes.

He said some managers and owners misallocated the loans. “Others instead of using the loans for the right purpose were lost in excitement and bought posh cars and invested the funds in luxurious weddings or went partying with bank loans. Their businesses could not be sustained,” he explained.

Wafula, the hotel manager who has stood the test of times said that some investors enter the industry with hardly any plan and attributes the demise of some hotels to lack of planning.

Experts in this trade advise Rwandans in this highly volatile and competitive hotel sector to embrace trainings for their employees and employ people with relevant skills.

They also feel training hotel operators in financial management is crucial. Rwanda Development Board (RDB) has tried play a role by imparting skills to service providers although more in that direction was still needed. Early this year 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. 

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