The hospitality sector is likely to continue its post-COVID recovery, but its real challenges lie in hotel management, according to a report by real estate firm Knight Frank.
- •Occupancy rates for high-end hotels reached 57 per cent in third quarter of 2023, a 32 per cent increase compared to the same period in 2022.
- •Excluding Kenyans, visitor arrivals via Jomo Kenyatta International Airport (JKIA) and Moi International Airport (MIA) recorded a 28.70 per cent rise between January and October in 2023, compared to 2022.
- •Despite the recovery, the number of visitors remains short of 2019 levels (best recorded hospitality year in Kenya).
It appears, the sector is gradually emerging from the constraints imposed by the Covid-19 pandemic. In the foreseeable future, there is optimism that the sector will stabilise and regain profitability, thereby reigniting strong investor interest.
Coastal hotels experienced high occupancy rates as both local and international travellers flowed to Kenya’s coast to enjoy the festive period. Company retreats, meetings and incentive travel contributed to increased occupancies as top management chose coastal hotels for their year-end financial reviews.
The resultant rise in bed occupancy has not corresponded with net profits due to increased operational costs in the current tough business environment. The hospitality sector’s growth rate is also likely to be hampered by visa challenges as Kenya is ranked 29th out of 54 African countries in Visa Openness as indicated by the Africa Visa Openness Report 2023. This is compounded by the global economic challenges and competition from neighbouring regions such as Rwanda and Zanzibar.
Hotel Management
According to the second-half Hospitality Market update by Knight Frank, hotel management remains a key challenge for hotel investors locally, consequently hotel owners continue to look for established operators to leverage on their brand and operational efficiencies.
- •During the second half 2023, Hong Kong-based Swiss-Belhotel International has taken over the management of the Nairobi Safari Club and Emory Hotel in Kileleshwa.
- •Nairobi Safari Club comprises 146 rooms which vary from studio, panorama rooms to executive and presidential suites as well as conferencing facilities.
- •Swiss-Belhotel International provides professional expertise and management services for hotels, resorts and serviced residential properties with its portfolio covering more than 125 hotels and properties in 20 countries, among them China, Indonesia, and Malaysia
The hospitality market is witnessing growth with notable developments during the review period. A new 231-room Argyle Grand Hotel was opened near JKIA, while the MGM Muthu Hotels chain launched their latest property – MGM’s fifth hotel in Kenya – in Nanyuki, known as Muthu Warwick Mount Kenya.
Additionally, the Communications Authority of Kenya requested for Proposals for consultancy services to undertake a feasibility study on developing an ICT hub, convention centre, hotel, offices, commercial centre, and parking silo at their headquarters in Nairobi.
The hotels’ bed occupancy rate is also faring well, albeit still short of 2019 levels.
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