Nairobi's hotels set to reach true potential with stability

The Nairobi Serena Hotel is part of the Serena chain of hotels.

Image: www.kenya-advisor.com

This is the conclusion of a new report on the prospects for Nairobi's hotels by global consultancy HVS, which says that a period of calm in the Kenyan city will enable its tourism industry to recover and its hotels sector to improve occupancy and confidence.

Dubbed the safari capital of Africa, Nairobi was a booming tourist hub - the transit point for some five million arrivals a year, many heading for safari or beach holidays. However, last month there were bombings in the capital and Mombasa, which forced UK holiday companies to cancel flights to the country until the end of October.

In 2013 the main terminal at Nairobi's airport was destroyed by fire and a siege in its Westgate Shopping Mall in September made headline news around the world. These incidents followed a controversial presidential election in March 2013 and added to understandable nervousness amongst potential tourist and business visitors.

Hotel occupancy for the year dropped by 6.7% and RevPAR (Revenue Per Available Room) fell by 6.8%.

Terrorism had a minimal impact

"Terrorism had a minimal and only an immediate impact on the performance of the market. Of more consequence was the election," commented report author Tim Smith, director, HVS.

"If the authorities can control the threat of attack and improve actual safety and potential visitor's perceived safety, the fundamentals are there for the market to grow."

Investors and operators have demonstrated confidence in Nairobi's long-term prospects. Over the next 18 months there will be a high volume of hotel rooms coming on stream as newly built properties open for business. These include the 220-room Golf View Hotel, the 256-room Radisson Blu, and the 196-room Grand Sapphire, all due to open in 2015. Some 1123 rooms are under construction, with further hotels expected to open at the reconstructed and modernised airport.

"It will take a number of years for this new supply to be absorbed, but if the economic and population growth forecasts prove accurate the demand will quickly meet supply," said Smith.

Further challenges

However, VAT increases, the difficulty that tourists face in obtaining travel insurance for Kenya, and reissued travel warnings from countries including the UK and the US are further challenges to the city.

"While visitors must take sensible precautions and heed advice from governmental and security sources, the tourist attractions of Kenya are well documented, as is the friendly hospitable nature of the Kenyan people. This, coupled with forecast GDP growth in excess of 5% per annum in 2014, after below target growth of 5.1% in 2013, gives compelling reasons to visit Nairobi," concluded Smith.

Download a copy of Nairobi 2013: The Perfect Storm makes way for Nairobi 2014: Keep Your Nerve by Tim Smith.