Nairobi hotels ranked most expensive

Nairobi is one of the world’s most expensive cities for visitors staying in hotels and lodges, a newly released global hospitality report says.

Hotels.com, a UK-based agency that ranks hotels based on travellers’ choices, says the Kenyan capital recorded a 31 per cent average hotel room price inflation in the first half of this year to become the eighth most expensive destination in the world.

The average room price for Nairobi hotels stands at £138 (Sh17,250) same as Johannesburg, the South African city that finished fifth in the Hotel Price Index (HPI) compiled by Hotels.com.

Millions of travellers across the world use the index to decide which destinations to visit making it a critical part of Kenya’s attractiveness as a tourist destination.

Though some tourism operators see the high ranking as a potential deterrence to foreigners planning to visit Africa, hoteliers said it is a mere reflection of how competitive Nairobi has become as a business hub raising demand for quality rooms.

“The ranking does not necessarily make Nairobi expensive but casts it as a more competitive destination in a market where demand remains the key driver of pricing,” said Peter Waweru, the Sarova group’s marketing manager. “Nairobi has emerged as a major business hub in the region leading to increased demand for quality beds,” he said.

Hoteliers said the hotel room price inflation is mainly a factor of the supply shortage and the change from rack rates to demand pricing that allows prices to go up during periods of high demand and fall in slow months such as December.

“There is nothing wrong with the prices rising to meet the demand,” said Mike Macharia, the chief executive of Kenya Association of Hotel Keepers and Caterers (KAHC).

Mr Macharia says that beyond demand pressure, the hospitality sector has also been forced to factor in the high costs of doing business in Kenya that is mainly driven by turbulent fuel and electricity prices, hidden taxes such as compulsory licensing by the National Environmental Management Agency (Nema).

Nairobi hotels charge an average of $280 (Sh22,400) per night during peak season, which Mr Macharia says varies with different hotels in the range of between Sh1,000 and Sh1,500.

The sharp increase in hotel room prices is also being attributed to the heavy discounting that the industry had to make in 2008, following the tourism slump that followed the post election violence.

Last year, the global financial crisis forced the industry continue to stay on the discounts path making the recent jumps in pricing look significant. Kenyan tourism sector has recently attained full recovery and is expected to post record performance by end of year.

Nairobi hotels have reported high occupancy rates since January helped by various conferences in the city including two at the UN Complex in Gigiri and last week’s Commonwealth Parliamentary Association (CPA) and the Biodiversity conferences.

Most hoteliers say the premium charges are likely to continue as pressure mounts on Nairobi’s bed space with increased activity on the conferencing circuit.

Since 2007, a couple of new major hotels as well as smaller bed and breakfast units have opened in Nairobi and are positioning themselves to tap into the demand.

Starwood Hotel & Resorts recently announced plans to invest in Nairobi following in the footsteps of IHG and Rezidor.

The HPI is a regular survey of hotel prices in major cities across the world and is based on bookings made on the website.

Nairobi won the dubious distinction of having recorded the third biggest price rise during this period under review after Cape Town with a 54 per cent increment to £127 (Sh15,875) that was mainly driven by the World Cup, and Shanghai with £93 (Sh11,652), a 32 per cent rise.

Geneva is the world’s most expensive city according to the survey with visitors paying an average of £155 (Sh19,375) per night.

Mote Carlo with an average of £152 (Sh19,000) a night is second while New York, was third.

The increment in Johannesburg and Cape Town is “a reflection of the demand for World Cup rooms which helped drive up prices,” the report says. “The steepest price rises were seen in non-Euro destinations,” the report says.

Abu Dhabi recorded the biggest price fall of 35 per cent to £113 (Sh14,125) during the period under review.

The hotel pricing index showed that the global tourism industry has stabilised with a hint of a recovery especially in cities that were hard hit by the financial crisis last year mainly in Europe, Asia the Middle East and the US.

A resumption of corporate travel is seen as the main driver of most city travel and the main driver of prices in these destinations.