Heightened Appetite for Kenya’s Hospitality Sector Proof of Its Growth and Viability

There has been a heightened appetite for Kenya from international hotel brands which attests to the growth and viability of Kenya’s hospitality scene.

As a result, the hospitality sector is expected to continue experiencing activity in line with the government’s goal of increasing the number of inbound international investors by 16.0 percent in 2018 from the 1.4 million recorded in 2017, while also increasing the sector’s contribution to the national GDP growth which came in at 1.2 percent in 2017 from 1.1 percent in 2016.

Cytonn Investment’s analysis Report of the Month of October noted that various facilities in Kenya’s tourism and hospitality sector, received global accolades during the World Travel Awards (WTA), held in Durban, South Africa, including Maasai Mara as the Leading National Park, Diani as the leading beach destination, and Kenya Airways as the Leading Airline for Business and Economy Classes, affirming Kenya’s status as one of the most renowned tourist destinations globally.

Kenya Airways continued to expand its continental and global market share as it resumed its daily flights to Gabon after a 6-year break. The airline also launched its direct flight to New York, a move that is bound to enhance Kenya’s tourism industry through increased international tourist arrivals, especially from the US. As at 2017, arrivals from the United States came in at 148,400, compared to the United Kingdom’s -which operates direct flights to and from Nairobi and London- with 168,000, according to KNBS Economic Survey 2018.

Also during the month, the Tourism Finance Corporation, a Development Finance Institution mandated with facilitating and providing affordable development funding for long-term investments in the Kenyan hospitality industry, announced plans to reduce its cost of credit to 9.0 percent from the current 11.0 percent, for hospitality sector investors whose businesses are registered in Kenya.

This is in a bid to encourage hotel investments in counties outside Nairobi. This is in line with its goal of achieving 65,000 new hotel rooms countrywide by 2030. This offers an impetus for local hotel investors considering that hotel development requires a huge capital outlay compared to other developments, such as residential.

In terms of expansions, Global hotel chain, Marriott International announced plans to increase its presence in Kenya from two hotels to five. The leading global hotel group’s expansion strategy includes a 365-room, 5-star JW Marriott in Westlands, Nairobi, slated to open in 2020, and a 250-room facility under its Protea brand, which will be located approximately 5 KM from the Jomo Kenyatta International Airport (JKIA) and is expected to open doors in 2021.

Radisson Hotel Group plans to open its first residence in Nairobi’s Arboretum neighborhood in Q2’2019. The property, which shall be under the Radisson Blu brand as Radisson Blu Hotel and Apartments, will have approximately 123 rooms and will add onto its current operational portfolio consisting of the 140-room Park Inn Hotel in Westlands, which opened in April 2017, and the 271-room Radisson Blu Hotel in Upperhill, which opened in November 2015.

Also, plans are underway for Sarova Hotels to refurbish its Panafric Hotel located along Valley Road, at a tune of 2.5 billion shillings. This will see the facility number of rooms increased by 87 keys, as well as improvement in other amenities such as an addition of 140 parking spaces and a conference center.