Kenyan Hospitality Industry to Grow at 6.1pc to 2020

Driven by Kenya’s positive economic growth trend, rising middle class, urbanization, devolution and position as a regional hub for multinational businesses the country’s  hotel industry is set for growth according to PWC Report, ‘Rooms with an African view Hotels outlook: 2016–2020.’

“Kenya’s hotel market is recovering, with growth being achieved for the first time in four years. This is projected to grow at 6.1% compounded annually to 2020,” Pietro Calicchio Director Leader – Hospitality.

The report states, “Robust economic growth will play a key role in attracting new hotels and business travellers as well as domestic and foreign tourists.”

However, in the near term, political instability and terrorism remain the primary issues impacting the hospitality sector and the experience in early 2016 indicates that declines in stay unit nights – the basic measure of an establishment’s accommodation capacity. It is defined as one stay – unit multiplied by one night- will continue.

“In 2015, stay unit nights fell 2.8%, but a 9.1% increase in the average room rate resulted in a 6.1% gain in room revenue. The average room rate fell 3.6% between 2011 and 2014.”

In the near term, the report projects, “A 5.7% decrease in 2016 and an additional 3.0% decline in 2017.”

“Helped by a strong economy, we look for a recovery beginning in 2018 after the 2017 elections, with growth averaging 1.1% compounded annually through to 2020. Despite that increase, stay unit nights in 2020 will remain10% lower than in 2011.”

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During and after the 2017 General Elections, the hotel occupancy rates are set to decline over the next two years. “The hotel occupancy rate will average 48.8% in 2020, down from 53.0% in 2015 and wellbelow the recent peak of66.1% in 2011.”

On average the report states, “For the forecast period as a whole, capacity will grow faster than stay unit nights and hotel occupancy will fall to an estimated 48.8% in 2020 from 53.0% in 2015.”

Compared to Tanzania, stay unit nights to rise from 1.6 million in 2015 to 1.8 million in 2020, a 2.4% compound annual increase.

The June 2016 Monetary Policy Committee survey showed strong forward bookings in major tourist hotels in Nairobi, Mombasa and Eldoret. July had an average of 56.4, August 62.4, September 50.9and October 56.3.

On the other hand, the latest classification of hotels and resorts, Information contained in Kenya Gazette Notice number 6111, Tourism Regulatory Authority (TRA), several hospitality establishments in the region dropped in their ratings after inspection done early this year.

In the Gazette Notice: Leopard Beach Resort & Spa, Swahili Beach Resort, both in the South Coast, and Medina Palms Suites in Watamu in the North Coast, have been conferred with five star status.

Sarova Whitesands Beach Resort and Spa, which used to enjoy five star status, has dropped and is now classified as a four star hotel.

Bahari Beach, Pangoni Beach Resort, Indian Ocean Beach Resort and Diani Sea Resort , Royal Court (Mombasa) and Mnarani Club (Kilifi ) were awarded three star status.

Kenya’s economy has expanded by 5.9 percent in the first quarter of 2016 compared to 5.0 percent in the same period 2015 first quarter due to positive growth from the tourism sector.

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Kenya’s economy expands by 5.9 percent  in Q1 2016