Popat family bets Sh3.1 billion on mid-priced hotels

The Popat family, which owns auto dealer Simba Colt Motors and has interests in the local franchise of global five-star hotel Kempinski, is betting big on the hospitality industry in which it has plans to invest about Sh3.1 billion ($34.5 million) to set up a chain of mid-priced hotels across Kenya.

Simba Corporation, the family-owned business, has lined up investments in four mid-range hotels in Nairobi, Kisumu and Naivasha, targeting mid-sized entrepreneurs and local holidaymakers in search of affordable accommodation.

The firm is currently setting up two four-star hotels under the “Acacia Premier” brand for budget tourists, with rates at Sh11,000 per night.

A similar number of two-star hotels dubbed “Acacia Express” and priced at about Sh5,500 per night will seek to capture the lower middle market.

Simba Corp chief executive Adil Popat in an interview last week said there is a high demand for hotel rooms in the mid and lower middle market segments driven by increased intra-county business and holiday travels.

“We see a lot of growth potential in the hospitality market as seen by growing tourist numbers and increased travels in the region, especially intra-Africa and regionally,” said Mr Popat.

“Our main clientele is local businessmen and travellers. There is huge demand for hotel, accommodation and conference facilities,” he said.
The investments are to be funded through a mix of bank loans and equity.

The developments indicate that the Popat family is moving to cut reliance on the auto dealership business where it holds exclusive franchises for brands such as Mitsubishi, BMW, Mahindra, Renault and Geely.

READ: Adil Popat's Simba vision, from cars to 5-star hotels

The additional hotel investments add to Simba’s hospitality portfolio that already features the five-star 200-room Villa Rosa Kempinski in Nairobi and the Olare Mara, a 12-tent luxury camp in the Maasai Mara national reserve, managed by Kempinski – Europe’s oldest luxury hotel group.

Simba has, however, chosen to manage the upcoming four hotels on its own, using the Acacia brand.

Acacia Premier Kisumu, featuring 94 rooms, three spa rooms, poolside deck, restaurants and a coffee shop is set to open in December.

Mr Adil said the company has leased the building and has invested $4 million in fit-out and refurbishment of the four-star hotel located in the leafy Milimani suburb and offers views of Lake Victoria.

Construction of the 168-room Acacia Premier Nairobi, to be located along Mpaka Road in Westlands, will begin next year. The 10-storey hotel will cost about Sh1.8 billion ($20 million) and will feature five restaurants, a club and a conference centre.

Simba Corp has acquired a two-acre piece of land in Naivasha near the upcoming Buffalo Mall where it will set up a 72-key two-star hotel.

“The design is ready and we’re about to begin construction,” said Mr Popat. The Acacia Express Naivasha will be set up at a cost of Sh311 million ($3.5 million).

A similar two-star hotel under the Express model will also be built in Nairobi’s Westlands district along Muthithi Road.