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Global hotels set to boost sector with investments

Sheraton Hotel in Kampala. Starwood Hotel & Resorts, which holds the Sheraton brand, is the latest chain to announce its intention to set-up shop in Kenya. Photo/FILE
Sheraton Hotel in Kampala. Starwood Hotel & Resorts, which holds the Sheraton brand, is the latest chain to announce its intention to set-up shop in Kenya. Photo/FILE 

Top European and US hotel chains are increasing their presence in Kenya, signalling the beginning of increased competition for the growing number of tourists and boosting the country’s standing as a conference tourism destination.

Starwood Hotel & Resorts, which holds the Sheraton brand, is the latest chain to announce its intention to set up shop in Kenya as it seeks a bigger share of Africa’s hotel business.

It joins other international chains like the Rezidor Hotel Group in Belgium and Southern Sun of South Africa that are turning to Kenya to expand their business and increase room capacity in the country, especially in Nairobi where conference tourism has been on the rise.

But the increased presence of these star players sets the stage for a bruising battle for customers in a market that has seen a significant share remain in the hands of the Serena group of hotels and Sarova group.

Starwood Hotel & Resorts director of acquisitions Patrick Finn, said on Tuesday that the firm was looking to expand to East Africa with Kenya and Tanzania as its preferred entry points.

He added that the firm is interested in the game-park themed hotels, which comes at a time when Kenya Wildlife Services is opening its restricted parks.

This investor interest is seen as a sign of confidence in the country and will also grow leisure tourism in the parks.

“The additional investment is an endorsement on the country and the sector,” said Mr Muriithi Ndegwa, the managing director of Kenya Tourist Board (KTB), during the presentation of Nairobi-based Holiday Inn’s new owners.

He noted that the sector has recovered and is on the way to recording further growth.

Tourist numbers are expected to surpass the 2007 sector benchmark — arrivals of over one million with the half year numbers showing a 17 per cent rise compared to the same period last year.

About 482,950 international tourists arrived in the six months to June.

Starwood Hotel & Resorts boasts nine brands and has over 900 properties in its portfolio across the globe.

However, it has very little presence in Africa.

The continent has become a major investment destination for hoteliers with South Africa, Egypt, Nigeria and Kenya being major targets.

Despite the slump that began in 2008 soon after the post-election violence followed by the global financial crisis, the country has retained the image of a viable tourist destination with growth potential.

In 2007, when Nairobi had just over 2,000 quality rooms, major hotel chains such as the Kempinski Group of Germany, the Rezidor Hotel Group of Belgium, Accor of France and Prime Properties from South Africa were already eyeing the market with a view to developing new properties or signing management contracts with existing ones.

Their impending entry into the market was welcomed as a means to address the shortage in bed capacity that had long stressed the sector as business and conference travel increased.

So far only the Rezidor Hotel Group has entered the market with its hotel - the Raddisson - expected to open its doors in 2012.

Other properties are also under construction and are projected to increase the number of quality rooms by 1,000 units in the next two years.

These include the Sankara in Westlands, Weston near Wilson Airport, and the Simba Group on Waiyaki way among others.

Bed capacity

The opening of Crowne Plaza, Ole Sereni, and Tribe over the last two years has also helped increase bed capacity in the city.

South African hotel chain Southern Sun will take over the Holiday Inn from August 1 and will invest over Sh80 million on refurbishing the property.

“In cities new properties generate more business for the destination so we will be able to maintain our occupancy rates,” said Holiday Inn general manager Paul Norman.

Outside of Nairobi there has been increased activity in Kenya Wildlife Service-run parks as they invite investors to put up eco-lodges in some of the country’s leading parks.

At least 13 new lodges are expected in the Tsavo Conservation Area and Impala Sanctuary.

The Serena Group of Hotels is developing new high-end lodges in Elementaita and Laikipia.

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