The cost of eating out at restaurants and booking accommodation services has hit a historic high amid a sharp increase in the cost of food, utilities, and other services—pointing to financial strains for revellers as they head out for this year’s Easter festivities.
This has slowed down the growth of one of Kenya’s most important service sectors, dimming the post-Covid-19 boom that it recorded in 2021.
Fresh data from the Central Bank of Kenya (CBK) shows inflation in restaurants and accommodation services hit 6.42 per cent in January, the highest since Kenya rebased its inflation indicators in 2020.
It also marks the 12th consecutive monthly increase in the inflation of restaurant and hotel services, a run that started way back in January 2022 after having dropped from 0.48 per cent to 0.15 per cent in December 2021.
The sector was the most hit after Kenya put in place months-long lockdown in March 2022 to prevent the spread of Covid-19, forcing restaurants and hotels to close shops, leading to the loss of thousands of jobs.
The pandemic saw the sector shrink by 47.7 per cent in 2020 but it bounced back to grow by a record 52.5 per cent in 2021 after the country lifted most of the movement restrictions and containment measures.
The growth spilt over into the first quarter of 2022 by growing 56.2 per cent before the breakout of the war between Ukraine and Russia plunged the global economy into chaos.
This saw the sector’s growth shrink to 22 per cent in the second quarter and 22.9 per cent in the third quarter, according to data from the Kenya National Bureau of Statistics (KNBS).
“The accommodation and food service sector grew by 22.9 per cent in the third quarter of 2022 compared to 127.5 per cent growth in the corresponding quarter of 2021. The visitor arrivals through the two major airports increased by 44.6 per cent from 217,873 visitors in the third quarter of 2021 to 315,112 visitors in the quarter under review,” said KNBS.
In the rebased Consumer Price Indices (CPI) used by the KNBS, urban households exhaust about 8.1 per cent of their monthly expenditures on restaurants and accommodation services.
This is only behind spending on food and non-alcoholic beverages (32.91 per cent), housing, water, electricity, gas and other fuels (14.61 percent), transport (9.65 per cent), making the cost of eating out and booking accommodation services a key indicator of the cost of living.
Kenya’s hotel industry is heavily reliant on foreign visitors. International tourist arrivals shot up 70 per cent to 1.483 million in 2022 from 870,465 in 2021 while inbound receipts grew 83 per cent to Sh268 billion from Sh146.5 billion.
Of the arrivals, 37 per cent came for holidays, 28 per cent were visiting friends and family and 27 per cent arrived in the country for business.
The cost of food, non-alcoholic beverages, alcohol, fuel, and utilities such as electricity, water, and cooking gas has risen sharply over the same period, which has increased the operating costs for hoteliers.
Inflation hit 9.2 per cent in March, which was driven by a 13.4 per cent rise in food and beverage prices compared to the same month last year while the cost of housing, water, electricity, gas, and other fuels increased by 7.5 per cent.
Further, the cost of transport has shot up by 12.6 per cent from March last year.
