The billionaire owner of 680 Hotel in Nairobi’s city centre has sold the three star-facility to Machakos-based Maanzoni lodges for an estimated Sh1.2 billion, underlining the deal-making in Kenya’s hospitality sector.
A transaction advisor who participated in the deal and who spoke to the Business Daily on condition of anonymity said it had received regulatory approval.
680 is part of the Sentrim Hotel portfolio associated with billionaire investor Jagdesh Patel, who in 2018 tapped property firm Knight Frank to sell his eight hotels at a guiding price.
Knight Frank on Thursday signalled that the sale of the other seven hotels, including Boulevard Hotel, Castle Royal Hotel (Mombasa), Elementaita Lodge, Samburu Lodge, Sentrim Tsavo, Sentrim Amboseli and Sentrim Mara, are in the last stages of conclusion.
The 680 will join the Maanzoni franchises, including the three-star lodge with 326 ensuite rooms located on a 28-acre plot in Lukenya, Machakos.
Maanzoni is associated with businessman Chris Musau who in 2019 announced plans to build an 11-storey 300-bed hotel with luxurious residential facilities in Machakos town.
The deal comes in a period when top hotels have either closed shop or witnessed ownership changes as the sector recovers from Covid-19 travel curbs.
“Maanzoni has completed the sale of 680 Hotel. They needed a presence in Nairobi’s city centre,” said the advisor to the 680 hotel deal.
680, which got its name from the number of beds it had when its doors opened, is the biggest moneymaker for the group, raking in Sh213 million annually in 2018.
Knight Frank holds that profit from 680 can either be maximised either by renovating the building into an office block or letting the three-star hotel continue its good run.
The hotel is said to have attracted interest from both local and foreign investors amid speculation that Deputy President William Ruto had an interest in the facility.
Inside the Sentrim Group is a complicated ownership web that has buried the individual owners’ identities in several layers of local and offshore trusts and companies.
Documents sent to potential buyers only reveal three individuals as minority shareholders, with companies as majority shareholders.
Mr Patel, Rajnikant M. Shah and Harji V. Hirani each owns a share in local companies that own hotels in the Sentrim Group.
The Nairobi-registered firms, Mayhouse Ltd (680), Chezer Investments (Boulevard), Newgate Management Ltd (Castle Royal) and Operation Castle (Sentrim Elementaita), own the buildings and land on which they sit.
Mr Patel, Mr Shah and Mr Hirani own one share in Mayhouse, Chezer, Newgate and Operation Castle while their offshore companies own the other 128,000 shares.
The four local companies are, in turn, majority-owned by four companies registered in the British Virgin Islands and Mauritius.
Mr Musau, the man behind Maanzoni, started his hotel brand as a pastime two years after he sold his Nova Supermarkets to retail giant Naivas.
He bought 10,000 acres through local lenders, personal savings and family resources and sold off most of the land, including to his late brother-in-law and former Cabinet minister Mutula Kilonzo.
The late Mutula’s Kwa Kyelu ranch is a stone’s throw from Maanzoni.
Mr Musau has been planning to expand his franchise beyond Machakos County and 680 offers an opportunity to operate a hotel and office space in the Nairobi city centre.
Kenya’s tourism industry has started to pull out of its deep Covid-19-induced slump as local travellers take advantage of lower prices, but foreign visitor numbers are still well below pre-pandemic levels.
The country expects the sector, typically one of its top sources of foreign exchange, to earn Sh173 billion this year, up 18.5 percent from last year. Earnings slumped to Sh88.6 billion due to Covid restrictions.
They bounced back to Sh146 billion last year, with the number of hotel nights occupied by Kenyan travellers doubling during the period.
A number of top hotels, including Hilton, InterContinental, and Laico Regency in Nairobi’s city centre, stopped operations amid the Covid-19 economic fallout. Some hotels changed hands.
Kasada Hospitality Fund, which is backed by the Qatar Investment Authority (QIA) — the country’s sovereign wealth fund—has fully acquired Crowne Plaza Hotel for an estimated Sh4.6 billion.
Saudi billionaire Prince Al-Waleed bin Talal sold his stake in The Norfolk and Fairmont Mara Safari Club to a Nepalese tycoon for Sh2.8 billion while City Lodge offloaded Nairobi’s Fairview Hotel, Town Lodge and City Lodge Two Rivers to real estate investor Actis for Sh1 billion.
Local resorts, which normally concentrate their marketing efforts on foreign tourists, were forced to turn to the domestic market by the pandemic, offering cut-price rates to entice holidaymakers.
Foreign visitor numbers were still sharply lower than pre-pandemic levels, at just under 870,500 last year against two million in 2019. They are forecast to reach 1.03 million this year.