Wise Owl Motel close shop

LONG-ESTABLISHED Mutare hotel Wise Owl Motel dosed operations last week, Business Post reported.

Wise Owl Motel, owned by prominent businessman and Zimbabwe National Chamber of Commerce national president Mr Hlanganiso Matangaidze, will become the second hotel to close down following the closure of the exquisite Penhalonga-based hotel, La Rochelle, in January last year.

A total of 60 employees including management and staff have been rendered jobless following the closure of the establishment In a termination of contract of employment notice to employees in November last year, Mr Matangaidze stated that a $53 441,45 High Court verdict to pay employees their outstanding salaries compounded its financial woes.

"Wise Owl Motel (Pvt) Ltd has been renting the business premises from Wise Owl Properties (Pvt) Ltd and consequently due to bad economic environment the company has not been viable," reads the termination of employment letter signed by Matangaidze.

"As you are aware, the company was granted a judgment against them in the matter between the general secretary of the National Employment Council for the Catering Industry and Wise Owl Motel (Pvt) Ltd Case No: HC707M3 in the sum of $53 44145, which debt it is unable to pay off and thus has also been worsened by failure to pay rentals to the lessor, who has given (3) three months' notice of cancellation of the lease agreement

"As a result, the company is shutting down its operations within the next (3) three months. It is in this view that we formally give you (3) three months' notice of termination of the contract of employment effective 14th of November 2014," read the letter to employees.

In an interview last Friday, Mr Matangaidze cited viability challenges and said he had failed to secure a financier by February 15 as he had indicated in November and shutting down was the only viable option for now.

"The business has not been performing well, so what else can I do? I have foiled to secure a financier in the three months I had indicated since November, so shutting down for now is the only viable option," Mr Matangaidze said.

Wise Owl employees who spoke on condition of anonymity said they were owed salaries amounting to $150 000, ranging from three to 10 months.

"We last worked on February 13 before a meeting was called on February 14 when it was announced that operations were winding up. During the notice period, every employee only got $225 and we are still to be informed of the payment plan of our balances and benefits which we have since filed with the National Employment Council," said an employee.

Hospitality Association president Mr Tamuka Macheka, said as of end of last year, the national occupancy rate of the hospitality sector was 45 percent which meant there was very little business, especially for small city hotels.

"City hotels are driven by conferencing. The national hotel occupancy should actually be lower, but was raised by hotels in Harare and Victoria Falls that get the bulk of business. With the liquidity crunch haunting the economy, domestic tourism is very low," he said.

Mr Macheka added that the country's utility costs were also high compared to the region, thereby increasing the cost of doing business.

"We are worried that ZESA is mooting increasing electricity tariffs by 6 percent at a time when business is negotiating for the reduction of the existing tariffs. Even the television licence which is pegged at $100 per television set is too much for hotels. In Zambia, it costs about $10 per television set This is a reason why our prices are on the upside compared to our regional counter-parts," said the HAZ boss.

He added that Government should also revisit the 15 percent Value Added Tax on foreign visitors that book in local hotels.

He said that would add the occupation price to uncompetitive regional levels which was retrogressive for tourism and hotel occupancy increase.

Legal experts said the provisions of the 2002 and 2005 Labour Act amendments placed too much unrestricted rights in the hands of the employee. A survey by Business Post last year revealed that almost every week movable assets of several companies are being attached and auctioned.