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Hotels face an uncertain future as oil companies build their own accommodation units. Will encouraging tourism save them?

At the start of the petroleum exploration in the Albertine Graben, the districts of Hoima and Buliisa experienced significant increase in demand for accommodation by investors, businessmen and workers in oil related activities.

This led to renewed construction and estates business and a consequent increase in hotels and lodges in the urban centres.

Oil workers would be forced to retire to Hoima city and others in Buliisa town due to a shortage of accommodation services.

An increase in bookings meant that hotels provided important local revenue opportunities associated with the oil development.

But as construction of production facilities increase while Uganda embarks on the development phase to extract its 6.5 billion barrels of oil by 2025, fears of a likely pattern of boom and bust in the hotels and hospitality industry abound.

Analysts say in the coming phase of drilling activity there is likely to be a decline in demand for accommodation and this would leave the hotel sector badly hit.

Steven Birahwa Mukitale, a former Member of Parliament for Buliisa County on June 10, during a talk show at a local radio station postulated that by oil firms establishing their own housing units near the oil projects they deprive hotels of vital customers.

“Where is the local content if they establish their own camps to house workers? This implies that even the foodstuffs would be sourced outside the oil area and will make the local hotel owners to only be peripherally involved in the development,” he retorted.

To the contrary, oil firms feel it is unviable for people to drive for a long distance from where the projects are situated.

The Tilenga oil project in Buliisa district to Hoima city is 82 kilometres. The aforesaid oil project is located 20 kilometres away from Buliisa town.

The Albertine Journal has learnt that French firm, TotalEnergies manning Tilenga oil project in Buliisa district had by mid-May, 2023 completed establishment of 1,000 of the planned 4,000 housing units to accommodate workers.

China National Offshore Oil Corporation Uganda Limited which operates the Kingfisher Development Area in Kikuube district is also establishing an estimated 2,000 housing units.

A 1,445 kilometre East African Crude Oil Pipeline (EACOP) will also have four labour camps established during construction.

The camps are to be set up in Kibaale, Hoima, Mubende and Rakai which are some of the 10 districts to be traversed by the EACOP to export crude oil from Hoima industrial park to Tanga port in Tanzania.

Each labour camp is estimated to host 1,000 workers including expatriates, construction crew, welders, drivers, foremen and ICT specialists.

This is bad news for the hoteliers, as many hotels and lodges have made substantial investments in upgrading facilities to tap into the sector in which originally they were expecting a bonanza.

However, other experts say all is not lost and there is still some hope of getting a return from oil induced tourism and given that the oil-rich region is endowed with diverse endemic species of high conservation value and a varied landscape with many ecosystems.

Many areas offer great scenic beauty, interspersed by an extensive system of Lake Albert, the rift valley and River Nile.

The area has magnificent features such as salt pans and hot springs in Kigorobya and Wildlife reserves in Kaiso, Budongo and Bugoma forests where one could view chimps, endemic birds, mammals and amphibians.

With the roads now neatly paved from murram to tarmac to enable oil production, it would be easier for tourists from Murchison Falls National Park to stay in the area and view these unique features and then connect to Kibale National Park or go further south.

“You can’t dispute what is in the oil area, it is very attractive. But, unfortunately the tourism industry in Bunyoro is not promoted well. Even packages tour operators’ sell do not target the oil-rich and most times tourists just proceed to Kibale National Park in Fort Portal on their itinerary from Murchison Falls National Park,” says Irene Atuhairwe, a tour consultant.

Grace Koojo, a proprietor of Kontiki Hotel in Hoima City, says it is not good to invest based on the oil boom alone given the changing times but look beyond petroleum industry.

She said there is a need for a robust marketing strategy of these tourist attractions to increase tourism arrivals.

On top of the reduced expectations from oil, hoteliers told The Albertine Journal that they have equally downsized their initial estimates from the sector and now are focused on tourist arrivals.

The crowding of hotels in the city or towns has created unnecessary competition, yet there are other places that need services, especially near tourist attractions like parks and eco-tourism environs.

Koojo said hoteliers also need to be innovative and embrace eco-tourism around their hotel facilities.

Her hotel buildings in Butanjwa cell along Hoima-Kampala road are quite African purposely to imitate nature and the environment Africans used to have before modernity.

Looking afar are bananas, yams, some flowers and indigenous tree species creating a verdant scenery, which gives tourists a unique offer.

At the Cultural Lodge located opposite the kings palace-Karuzika in Hoima also when one enters inside the dining and the bar chairs are made out of animal skin from cows and goats.

Other art crafts and sculptures make one gaze in awe while enjoying yummy breakfast, beer or soda, water or a meal whose menu is a list of all dishes including African cousins.

The room beds are made out of unprocessed wood and the roofs of the cottages are made out of local materials like rope tied grass.

A few hotels hold cocktails on bonfires of ancient times where grandparents used to sit on bonfires and entertain their children using folktales and folksongs.

The issue is to show clients who check in here the African culture that will make more people want to visit them and also learn local culture.

Koojo said the magic of embracing eco-tourism has helped her maintain bookings at her leafy hotel and not only depend on the oil boom.

“We are coming out of our comfort zone because things are changing and we are looking at it as an opportunity to promote eco-tourism,” she told The Albertine Journal by phone.

An economist on condition of anonymity, said the oil boom had offered hopes to many of the hundreds of locals who are not formally employed and created employment to locals and increased the demand for foodstuffs but now the expectations are mixed.

But Atuhairwe who also doubles as a founder of Kikooyi Adventure Safaris, a tour and travel Agency, told The Albertine Journal that if hoteliers are targeting tourism, they should engage tour operators.

“I have been in the tour industry for 10 years. Not much is promoted in Hoima, Bugoma central forest reserve and hoteliers engage rarely with tourism promoters,” she said, adding “it’s about tour operators not government to promote it.”

But Buliisa taxi driver Ahamad Kaahwa is optimistic that the oil discovery will bring him extra income.

“I’m expecting good business in the region and it will be better for those with taxis. I don’t think people who come to see the source of the world’s longest heated crude oil export pipeline would not want to tour around if the sites are marketed. There, we will drive them around and earn money. The good road network offers tourists a choice to either drive to Murchison falls national park, Nguse to view chimps, Budongo forest in Masindi, cultural sites or Nyabweya parish catholic church for religious tourism in record time,” he said.

While the benefits by the hospitality sector around the oil boom are unlikely to be as great as initially expected, Uganda Tourism Board (UTB) should take a longer-term view.

“If you visit other oil producing areas like Qatar, Saudi Arabia and Norway, there is so much capacity that its attractive in terms of price, and the region will also have to offer to tourists,” Jovia Kankeire a tour guide said.

“They might not come now, but there will be a long-term benefits. People who did not know this place before will know it through oil, and they might visit in future,” she added.

After years of lost revenue when travel was restricted due to COVID-19 for a period of two years, tourism lost $1.0b, according to UTB.

However, there has been an improvement in figures in 2021 after the economy re-opened and oil activities peaked.

Murchison Falls National Park, Uganda’s largest and oldest conservation area, registered 9,200 in arrivals, out of which 6,200 were domestic tourists.

Success of tourism in the region will be boosted by the second biggest international airport in Hoima and Bugungu airstrip to access tourist destinations within the region.

The oil and gas sector is projected to rake in investments $20b in the coming years and create an additional jobs of 160,000 and this economic activity is expected to boost tourism.

Koojo asks the government to address cost pushers such as power fluctuations, offer them incentives like tax reliefs and make credit affordable.

Kankeire said whether there is disappointment or joy for the tourism sector, preparations of getting ready for oil production could trigger the region’s hoped revival.

“But perceptions of the country continue to be central issue and much will hinge on convincing western markets that the recent passing of the harsh anti LGBTQ+ legislation which was accented to by the President and human rights violation issues are not detrimental to the tourism sector.”

Tourism which accounts for 8 percent of Uganda’s Growth Development Product and employs 7 percent of the population is being battered by the LGBTQ+ legislation with calls for tourists to boycott the country.

10 replies on “Hotels face an uncertain future as oil companies build their own accommodation units. Will encouraging tourism save them?”

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