Big Interview: "Government needs to review tax regime to rescue hotel industry"

Uganda Hotel Owners’ Association( UHOA) have on several times asked government to scrap or reduce multiple taxes which they say are slowing the growth of the hotel industry and threatening the survival of a number of facilities, especially in upcountry locations.

In an interview, Jean Byamugisha, the association's executive director, told the Nile Post that currently hotels are paying 25 different types of taxes and licenses just to operate.

Excerpts below:

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The Uganda Hotel Owners Association (UHOA) is the umbrella organisation that brings together all hotels in the country. What role does it play in improving the hotel sector in Uganda?

Our major role is to lobby and advocate for a conducive business environment for the hotels in Uganda. For instance, we lobby for a good tax regime and more incentives to encourage investment in the sector.

We are also the principal voice for all things hospitality in Uganda. UHOA engages with the agencies and partners to get assistance for her members. For instance, we work with the Uganda Tourism Board in matters of quality assurance, grading and classification.

Following the full reopening of the economy, how would you rate the performance of the hotel industry at the moment?

The health of any hotel can be gauged by its occupancy rates. Since the reopening of the economy we have noted an increase in the occupancy rates in many hotels. This has been occasioned by the festive seasons (Easter, Eid), long weekends and public holidays as well as people’s willingness to hold more in person meetings and events as opposed to the online options.

In 2020, occupancy rates fell as low as 2% during the lockdown. Now we're seeing occupancy rates of up to 35%. We expect this number to increase when the peak season starts (May to August).

Talk about classification of hotels and grading. How are they vital in the progress of the industry?

Yes, classification is very important to the sector. It’s one of the ways of regulating a sector and its growth. It helps to stabilise and set standards in the sector. For instance if a hotel is graded four star, it cannot just relax because it can be downgraded. It must ensure that it maintains the same level of service it got when it was accredited this ensuring standards.

Grading and classification also helps us in marketing our sector. When bidding for international conferences, people usually want to know how many graded hotels a country has. This helps us to be able to qualify for such business.

Why is it illegal for any hotel to advertise itself as a star rated hotel?

It’s a promise to the guest on what to expect when they book a hotel. For instance, if a guest books a five-star hotel, they will pay higher because they expect more amenities and better service than in a one-star hotel. So if they get there and find a lower star hotel this is considered false advertising which is fraudulent and criminal.

Has the government helped the sector in any way to recover from the effects of Covid-19?

The government put in place a stimulus package that was channeled through the Uganda Development Bank. Money was set aside to help the hotels with their operational costs particularly in paying staff salaries. This was supplemented by a grant from the European Union to ease the burden on the hotels. However, there was limited access to this facility due to the stringent criteria for application.

What major changes have you made in the industry since you came into office?

The biggest one has been the growth of the association. When I came to office almost 7 years ago, UHOA had 220 members. Currently we have 640 members across the country making us the biggest private sector association in the tourism sector.

 

What are some of the challenges  the industry faces?

Covid-19 was a huge challenge not just for the industry but for our office and membership as well. Fortunately, we managed to retain all our staff and have landed back on our feet.

As an industry we still have the challenge of poor service in our hotels. Everyone has complained and as an association we are trying to address this through regular training and capacity building programs.

How can the government assist the industry to perform better as it continues to recover from the effect of Covid-19?

Government needs to review the tax regime of the hotels in Uganda. Currently hotels pay 25 different types of taxes and licenses just to operate. Many don’t break even and a few went into foreclosure during the pandemic. Hotels create jobs and also offer a market for many goods and services. It’s more beneficial to our economy to have a robust hotel sector.

Are there unique features that tourists look out for in terms of accommodation in Uganda?

Yes. Tourists are very concerned about the environment and now prefer to stay in eco-friendly establishments. Hotels which recycle and have environmentally friendly practices are highly in demand at the moment.

What are the most visited hotels in Uganda, do you have any statistics?

Hotels in Kampala have the highest occupancy rates because of hosting many meetings and events over the weekends. They are also great for short stays. Lodges in the parks get a lot of traffic on holidays and long weekends when people get to travel upcountry.