Nairobi Hotels See Declining Performance in 2017 – Report

By David Indeje / December 4, 2017

Nairobi Hotels See Declining Performance in 2017 - Report

Nairobi’s Hospitality Sector registered an overall decline in performance in 2017, recording a decrease in terms of Average Daily Rates, revenues and occupancy, attributed to political tension and increased room supply , according to Cytonn Investments latest sector report.

“On performance, following a period of stability in 2016, the sector in 2017 recorded a decline in ADR by 6.9 percent to Kshs 12,952 per room sold from Kshs 13,909 in 2016 while room occupancy declined to 49 percent from 53 percent in 2016. The declined performance is mainly attributed to political instability which resulted in reduced demand, the effects of the depreciation of the Kenya shilling to the dollar, as well as increased room supply during the period,” according to Nairobi’s Hospitality Sector Report themed“Towards Resilient Growth”.

The report says 4-star hotels in Nairobi were the best performing with an average occupancy of 56.6 percent  in 2017 compared to 3-star and 5- star hotels with 49.4 percent and 46.0 percent , respectively.

4 star are the best performing mainly due to high occupancy of 56.5% in 2017

For serviced apartments, Westlands and Kilimani have the highest supply with 40.4 percent and 25.9 percent of the Nairobi market share, respectively.

“Despite the high supply, they are the best performing nodes with yields of 7.3 percent and 7.2 percent, respectively above the market average of 5.8 percent rental yield. This is because they are both prime commercial hubs, within the UN Blue zone and with social amenities, making them suitable for expatriate living and thus retaining high occupancy of above 78 percent.”

The firm states that the decline in 2017 is only temporary and investors are optimistic. “ There is also increased interest from global brands who are seeking to increase their market share in Nairobi including Ramada and Movenpick.”

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David Indeje is a writer and editor, with interests on how technology is changing journalism, government, Health, and Gender Development stories are his passion. Follow on Twitter @David_Indeje David can be reached on: (020) 528 0222 / Email: [email protected]

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