Serena’s 2014 profits to drop by 25 per cent


Insecurity has greatly hurt Kenya?s tourism.

TPS Eastern Africa, the owner of Serena hotels and resorts, yesterday issued a profit warning saying its 2014 earnings declined by more than 25 per cent from Sh668.5 million posted in 2013.

The drop in profits by the industry’s only publicly traded company mirrors the dwindling fortunes inflicted by insecurity on tourism sector, a major foreign exchange earner, since 2011. The warning may only surprise investors if the dip surpasses expectation since the firm recorded 70.6 per cent fall to Sh41 million in the first half of 2014.

Managing director Mahmud Jan Mohamed said in a note to Nairobi Securities Exchange, where its shares trade, that a “challenging business landscape” in Kenya had a ripple effect across East Africa. The company operates 23 high-end chains of hotels and resorts in Kenya (nine), Tanzania (10), Uganda (two) and Rwanda (two).

“Foreign leisures and to a lesser extent corporate business segments took a cautious approach due to the elevated travel advisories and other forms of security alerts issued by governments of main source markets,” Mohamed said.

International media scrutiny that followed coupled with unrelenting insecurity incidences, he said, resulted in a significant slide in foreign leisure bookings and eventual grounding of charter flights into the country. Enforcement of the 16 per cent value added tax on tourism services and park entry fees in September 2013, and whose significant impact was felt in 2014, further hurt the competitiveness of the Safari business.

The Ebola epidemic in West Africa during the last quarter of 2014 worsened matters as most foreign tourists kept off Africa during the peak season last December, Mohamed said. The value of its shares at NSE fell by a marginal 2.7 per cent or a shilling to close at Sh36 per unit during yesterday’s trading.