Kenya remains a leading foreign direct investment (FDI) destination among its peers. This is attested to by the global hotel chains that are set to open their doors in the country by the end of this year.
These renowned brands — which include Accor-Pullman, Sheraton, Wyndham, Carlson Rezidor and Movenpick — are some of the biggest and most profitable in the industry.
Analysts point out that the additional 2,000 high-quality rooms would double our capacity in this high-growth sector within a short 24 months, signaling that although there has been a slump in tourism, the long-term outlook remains vibrant and very positive.
No global investor would put their money where assets, investments and returns are in jeopardy.
This is a resounding vote of confidence in the reforms being undertaken by the Government and stakeholders in the hospitality sector. It is also an affirmation of the broader business reform measures on the ease of doing business and improvement of the business climate for local and foreign investors.
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Betting big
Carlson Rezidor Group has bet big on Kenya — apart from the newly opened 271-room Radisson Blu in Nairobi’s Upper Hill, the group is opening a 162-room Park Inn by Radisson, and a 123-room Radisson Blu Residences next to State House, Nairobi.
Accor-Pullman is opening a 320-room hotel in Westlands. In the same area, AVIC China is undertaking the single-largest hotel property development in the region on 7.5 acres next to Simba Corporation’s flagship property, the Villa Rossa Kempinski.
AVIC’s 35-tower hotel and an adjacent 25-storey apartment block underlines the level of Chinese economic interest in this sector, although the number of visitors from China has hovered around 30,000-40,000 annually the last three years.
Simba Corporation, the local Mitsubishi Motors franchisee, are diversifying the conglomerate’s business interests and brand in the tourism sector through two associated mid-tier brands: Acacia Express and Acacia Premier.
Apart from key shareholding in Villa Rosa Kempinski and Olare Mara Kempinski in the Maasai Mara, Simba has renovated and upgraded the 94-room Acacia Premier in Kisumu. It is also nearing completion of the 168-room Acacia Premier in Westlands, and two budget Acacia Express hotels — one next to Buffalo Mall in Naivasha and another in Parklands.
Tamarind, the owners of Carnivore Restaurant in Lang’ata, are opening a 162-room business class Tamarind Tree Hotel. Wyndham Hotel Group is opening the 89-room Ramada in Parklands, and has entered into a management contract for the 290-room Wyndham Amboseli Golf Resort & Spa.
Movenpick is opening a 233-room hotel next to WestGate Mall.
StarWood Hotels and Resorts is opening a 194-room FourPoints by Sheraton near the Jomo Kenyatta International Airport (JKIA). Hilton Hotels International is also opening a 171-room Hilton Garden Inn at the airport targeted at business travellers.
Ole Sereni Hotel, managed by Sarovar Group of India, is building Ole Sereni 2 next to the current site — an additional 150 rooms, 11 meeting rooms and another 800-seater ballroom.
The Sarovar Group also manages the Heron Portico, formerly Heron Court Hotel, on Milimani Road, Nairobi, and the Zehneria Portico in Westlands. The group operates 70 hotels across India.
Mall expansion
At the Village Market in Gigiri, a 187-room hotel is under construction to add to The Tribe as part of the expansion of this mall in the UN blue zone.
Nearby, at Centum Investments’ Two Rivers mixed-property development, another two hotels are under construction — one is a 170-roomed three-star hotel owned by Johannesburg-listed City Lodge Hotel Group. They bought out the FairView Hotel opposite the Israeli embassy.
Charles Mugane Njonjo and Baloobhai Patel, the billionaire co-owners of the five-star 156-room Sankara Hotel announced plans to build a mixed development complex on 6.7 acres in Runda, including a Sh1 billion hotel.
These new hotel developments reassert our attractive and unrivalled repertoire on the global tourism circuit — which saw us ranked first in Africa on capacity and infrastructure expansion and development.
However, challenges remain, including the duplication of roles, and double taxation within the two levels of government.
Nothing emphasises the challenges that we face more than the Economic Survey 2016 report launched last week.
It points to a set of strong macro-economic fundamentals that should sustain momentum in the medium to long term. These fundamentals may have informed the global hospitality industry’s decision to invest long-term in Kenya’s tourism sector.
However, the report also highlights a steady decline in key headline indicators for the sector over the last five years, a cause of major concern for investors.
International tourist arrivals have plummeted from a high of 1.8 million in 2011 to 1.35 million in 2014, declining to 1.18 million in 2015 on the back of travel advisories issues in key markets.
This was exacerbated by global economic uncertainty on the back of lower global commodity prices driven by China’s slowdown, currency devaluations and market volatility, fuelling fears of another economic recession.
Kenya braved these headwinds to see its GDP grow at 5.6 per cent last year, outperforming the sub-Saharan Africa average of 3.8 per cent, and Eastern Africa’s average of 3.4 per cent.
Tourism earnings, however, fell to Sh84.3 billion from Sh87.1 billion in 2014. This is far cry from the highest-grossing earnings from the sector of Sh97.9 billion in 2011.
Further, hotel bed occupancy rates fell for the fifth straight year from a high of 7,015 in 2011 to 5,879 in 2015.
Business model
These statistics should spur us to continually improve our tourism business model using the Six Sigma and Kaizen business process improvements. We must begin by asking whether the underlying causes of the steady decline in earnings and numbers are structural or systemic, or both.
This is especially important because we ave instituted a number of far-reaching reform measures in the industry to increase our attractiveness and competitiveness.
The hospitality business process improvement measures that we have so far undertaken include engaging global media and PR mavericks to wage a #MakeItKenya media blitz on international platforms.
We have the TembeaKenya campaign locally, have expanded our hubbing and transit capacity at JKIA, streamlined tourist visa application processes, launched a common East Africa tourism visa and platform; and hived off the Tourism ministry from the larger East Africa Affairs, Trade and Commerce ministry.
We have also reformed institutions necessary for the growth of the industry, although the long anticipated merger for efficiencies is still far from execution.
It is not all doom and gloom though.
The local tourism mantra is paying off. Local conferences and Kenyan delegates rose by 4 per cent and 7.4 per cent, respectively. This took the edge off the 9.5 per cent drop in the number of international conferences held in Kenya last year, which decreased from 241 to 218.
Ultimately, like has been shown time and again, it is our resilience, innovativeness and agility as a nation that will keep us ahead of the curve. I have no doubt that we are equal to the task.
#Make it Kenya
The writer is co-founder and East Africa MD, KEAMSCO, a New York, Bremen, and Nairobi-based business advisory services firm. bizbeat@standardmedia.co.ke
