The High Court has ruled that where a bar operates a guesthouse and accommodates persons who qualify as tourists, such a business is required to obtain a valid licence from the Tourism Regulatory Authority.
Running a bar with even a handful of guest rooms without a tourism licence? The Tourism Regulatory Authority is coming after you.
The High Court has ruled that where a bar operates a guesthouse and accommodates persons who qualify as tourists, such a business is required to obtain a valid licence from the Tourism Regulatory Authority.
“In requiring Japhet Noti Charo to take out a tourism licence, the TRA acted within its statutory mandate,” said the High Court.
The court found that the nature of the business conducted by Mr Charo requires a licence from the authority.
The court made this ruling in a case in which Mr Charo asked it to prohibit the TRA from levying tourism licence fees, arguing that his business was simply a bar with eight guest rooms that occasionally accommodated lorry drivers.
Mr Charo sued the TRA in October 2024 seeking to stop it from levying the tourism licence duty on what he termed his small scale local bar known as BEER INN in Mbuzi Wengi village, Kwale County.
He also asked that the authority be prohibited from prosecuting him or taking any other action against him for want of a tourism licence.
His case stems from a three-day notice that the authority had given him to take out a tourism licence and pay penalties dating from 2023, failing which adverse action would be taken against him.
In his court documents, Mr Charo said he has been operating Beer Inn, which he described as a small typical traditional local bar within Mbuzi Wengi village.
“The facility has nothing to do with tourism nor does it attract local or international tourists. My licence does not permit me to engage in tourism activities,” he argued.
Guesthouse business
Further, he argued that the facility does not come anywhere near the objectives of the Tourism Act as stated in its preamble. According to Mr Charo, the Tourism Act does not apply to his facility.
“BEER INN has eight rooms used by my staff and occasionally by lorry drivers. TRA is misapplying the Act and Regulations thereunder,” he said.
The businessman explained that he took the decision to move to court after the TRA ignored his explanation that his facility has nothing to do with tourism or tourists, but is merely a pub for entertainment.
“It would be fair, just and reasonable for the orders sought to be granted,” he told the court.
However, the TRA opposed the application, contending that by virtue of the Ninth Schedule of the Act, Mr Charo operates a guesthouse, a Class A establishment with seven en suite rooms and a bar, which falls under its mandate and requires a licence.
Through its regional manager Wilson Kiplagat, the authority argued that by virtue of Sections 6, 7(c), 98, 112 and 114 of the Act, Regulation 14 and the Fourth Schedule of the Tourism Regulatory Authority Regulations 2014, Mr Charo cannot lawfully undertake the business without a tourism licence.
“Following inspection of the facility in 2020 and 2022, the authority recommended to Mr Charo to apply for a Tourism Licence but he took no action,” said Mr Kiplagat.
The authority further said that its officers visited the premises on September 24, 2024 to enforce compliance and issued a demand letter backdated to 2023 for accrued penalties as required by the Regulations.
“The authority acted within its mandate. This application is thus devoid of merit as it seeks to interfere with the lawful function and mandate of the authority and should be dismissed,” said Mr Kiplagat.
In a rejoinder, Mr Charo submitted that the TRA had not provided any evidence of the existence of a guesthouse business. While he accepted that he has eight small rooms used by his staff and occasionally by lorry drivers, he contended that this does not fall within the definition of the term “tourist”.
“TRA has misapplied the Act and regulations and ought to be prohibited. BEER INN does not fall within the ambit of the Act as it does not cater to tourists whether local or international,” he insisted.
However, the TRA maintained that Mr Charo is operating a guesthouse, the existence of which he has not denied.
“He has also not disputed that there are people who use the rooms in the guest house as tourists, within the definition in Section 2 of the Act,” the authority said.
Crack down on bars
Section 2 of the Act defines a tourist as a person travelling to and staying in a place outside his or her usual abode for more than twenty four hours, but not more than one consecutive year, for leisure, business or another purpose, not being a work related activity remunerated from within the place visited.
The court examined this definition and compared it with the business that Mr Charo operated and concluded that it indeed falls under the Act in question. From the court’s ruling, Mr Charo’s undoing was his admission that BEER INN had eight guest rooms, which were occasionally used by lorry drivers.
According to the court, Mr Charo did not state that the lorry drivers were his employees so as to confirm that he did not use the guest rooms to earn income from persons falling within the definition of a tourist.
“One can only conclude that the lorry drivers stay there during travel for business and stay for not more than one consecutive year. Accordingly, the lorry drivers fall squarely within the definition of ‘tourist’ under Section 2 of the Act,” said the court.
Having so found, the next question the court determined was whether the Act applies to BEER INN, which it answered in the affirmative.
This means that Mr Charo’s business required a licence from the TRA to operate, failure of which places him in breach of Section 98 of the Act, which prohibits any person from undertaking any of the tourism activities and services specified in the Ninth Schedule unless that person has a licence issued by the TRA.
The court ruled that having acknowledged that the eight rooms at BEER INN occasionally accommodate lorry drivers, Mr Charo cannot fault the TRA for concluding, upon inspection of the premises, that he is operating a guesthouse.
Further, Mr Charo stated that his licence permits the sale at BEER INN of local palm wine and beer to between 16 and 60 people. According to the court, the Act does not make a distinction between beverages.
Local palm wine and beer are beverages. The court therefore found that BEER INN, which sells these beverages, falls within Class B enterprises under the Ninth Schedule.
The court found that BEER INN is a guesthouse and that the lorry drivers accommodated at the facility are tourists by definition, and that the services offered at the entertainment joint fall within the list in the Ninth Schedule.
“It follows that by dint of Section 98(1) of the Act, Mr Charo requires a licence issued by TRA,” said the judge.
The court noted that Mr Charo had the onus of demonstrating that the TRA’s action was tainted by illegality.
“The court finds that TRA’s decision is thus not tainted in illegality. Mr Charo has failed to discharge the burden placed upon him. Accordingly, his Application cannot succeed,” said the judge.
The ruling means that Mr Charo must now obtain a tourism licence to operate and also pay the accrued penalties that the authority had demanded from the business.
This decision also signals that the TRA could begin cracking down on bars operating guest rooms without obtaining a tourism licence.
