Over the next two years, Kenya will also benefit from a number of new hotels opening, including hotels from Hilton, Radisson Blu, Pullman, Best Western, and Mövenpick.
This will as a result add some 1 800 over this period.
The PwC PwC’s 2018–2022, Hospitality outlook has noted that over the fiveyear forecast period, 13 hotels will enter the market, adding a total of 2 600 rooms and thereby accounting for a 14% increase in hotel capacity and a 2.6% compound annual increase in room availability from 2017.
“The combination of new hotels, more flights to Kenya, stronger economic growth, lower inflation and, most importantly, greater security should contribute to growth in guest nights. We project guest nights to rise at a 6.9% compound annual rate during the next five years.” The report reads in part adding that the combination of increased supply and reduced demand led to a drop in average daily rate (ADR) in 2017.
“With occupancy rates having fallen below 50%, we expect an additional decline in ADR in 2018, followed by modest increases thereafter. We project room rate growth to average 2.6%, compounded annually through 2022. We expect the average occupancy rate to rise to 58.1% in 2022, up from 47.3% in 2017 but still well below the 62.3% rate in 2012.” It adds.
“There are several factors that investors in Kenya’s hotels sector should consider. First, government has remained a significant client of the hotels sector, even when Kenya experienced a tourism downturn in 2008 and 2013. Second, devolution has facilitated increased opportunity in Kenya’s counties.” Says Said Bernice Kimacia, a PwC Assurance Partner and provides services to hotel sector organisations in Kenya and the East Africa region.
According to Ms Kimacia, while location certainly matters, successful hotel investors also wisely consider whether a well-rounded value proposition truly justifies the investment.
Cost and location are not the only factors to consider; a differentiated guest experience matters, too. Many hotels sector investors have recognised that Kenya provides a range of experiences including business centres as well as safari and beach destinations, all conveniently within short flights of each other.
Nairobi and other cities also offer easy access to the East Africa region. Kenya’s hospitality institutes and programmes offer a talented pool of trained professionals, whose quality service and credentials are recognised globally. It is not uncommon to encounter Kenyans working in hotels in Dubai, for example. “Overall, I would encourage investors to be cautious about the current size of the market and competition. This is not to downplay Kenya’s advantages but instead to convey realism. With a competitive and differentiated value proposition, hotels can prosper in the short- and medium term. But a one-size-fits-all approach is not likely to work in Kenya.”Ms Kimacia cautions.