Kenya: Hotel room rates projected to rise as demand outpaces supply

Kenya’s hospitality sector capacity is projected to grow faster than demand but grow more slowly over the 2019-21 period according to a report by Price waterhouse Coopers (PwC).

“The occupancy rate will fall during the next two years as we are projecting capacity to grow faster than demand in the near term, but grow more slowly over the 2019- 21 period. For the forecast period as a whole, stay unit nights will grow faster than capacity and hotel occupancy will rise to an estimated 57.4 percent in 2021 from 52.9 percent in 2016.” PwC says in African insights
Hotels outlook: 2017–2021.

These developments, along with a stable local economy, are attracting international hotels to Kenya. Sheraton, Ramada, Hilton, Best Western, Radisson, Marriott, and Mövenpick are among the international brands scheduled to open hotels in Kenya during the next five years.

“A total of 13 new hotels are expected to open by 2021, adding 2 400 rooms and expanding the hotel capacity by 13 percent  with a 2.5 percent compound annual increase in available rooms over the next five years.”

“Kenya benefited from the lifting of travel advisories to that country and growth in domestic tourism in a strong economic environment, as well as a series of incentives introduced by the government,” Pietro Calicchio Director Leader – Hospitality.

With new hotels expanding supply, the sector expects room rates to continue to grow at relatively moderate rates as hotels look to sustain their recent expansion in the face of growing competition. “We project room rate growth to average 3.3 percent compounded annually through 2021.”

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The government is helping to boost Kenya’s tourism.

The 16 percent VAT on park entrance fees has been eliminated, visa fees for children have been removed, and Kenya Wildlife Service park fees have also been reduced. The government also waived the landing fees for charter flights at the Mombasa and Malindi airports and authorised 4.5 billion Kenyan shillings (US$44 million) in the national budget to promote tourism.