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InterCon hotel owners auction movable assets

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InterContinental Hotel. FILE PHOTO | NMG

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Summary

  • The hotel has put thousands of goods up for auction including vehicles, bedsheets, televisions, carpets, and kitchen equipment.
  • Garam auctioneers said they had received private instructions to put the hotel property up for sale.
  • Kenya Hotel Properties (KHP) is seeking a consultant to advise on a change of business model for the hotel, which closed permanently in August last year.

The owners of InterContinental Hotel, including allies of former President Daniel arap Moi, have put up thousands of movable properties on a fire sale as they prepare to lease out the building or convert it into a mixed-use property.

The hotel has put thousands of goods up for auction including vehicles, bedsheets, televisions, carpets, and kitchen equipment.

Garam auctioneers said they had received private instructions to put the hotel property up for sale.

Kenya Hotel Properties (KHP) is seeking a consultant to advise on a change of business model for the hotel, which closed permanently in August last year, to include a mixed-use approach —signalling the hotel building could be converted to office blocks, shops, and mini-hotels.

It is also open to selling or leasing the InterContinental Hotel building to the government, which owns several properties in the vicinity including Parliament, Kenyatta International Convention Centre, and Sheria House.

“Duly instructed by Kenya Hotel Properties we shall sell the undermentioned goods belonging to the former InterContinental Hotel located off Parliament road through a public auction,” the auctioneers said.

The permanent closure and the decision of the global chain InterContinental Hotels Group (IHG) to stop running the Nairobi hotel has downgraded its value.

The auction will see some proceeds recovered, which will be used in the restructuring leaving the iconic building as a stripped shell on prime real estate.

The hotel owners are now looking for various strategic options available for the company premises and adjacent parking silos to repurpose the property to ensure maximum returns on investment.

This signals that KHP is keen on earning leasing fees from the 389-room InterContinental Hotel, whose sale of the government stake has dragged for more than a decade.

An investment banker close to the Moi-linked Sovereign Group told the Business Daily earlier that the firm had little interest in purchasing the government stake amid the slump in the travel sector and the exit of the anchor partner -- the IHG.

"There is little value for Sovereign to run the hotel. The land where the hotel sits is more important than the hotel," said the investment banker who requested not to be identified.

The Privatisation Commission was expected to start talks with Sovereign Group to buy the stake that the government holds in the hotel.

But the commission, which is in charge of the sale of government firms, said it had yet to receive offers from local or foreign buyers willing to acquire the stake in the hotel, which closed in August at the height of the Covid-19 crisis.

Sovereign Group is the largest individual local investor in the hotel with a 19.2 percent stake while Development Bank of Kenya has a 12.99 percent stake.


COVID-19 CRISIS

Joshua Kulei, the late President Moi’s former private secretary, Rodger Kacou, and Ahmed Jibril own a combined stake of less than one percent in the firm.

The InterContinental Hotels Corporation Group, which is listed in both the UK and the US, has a 33.8 percent stake in the hotel group.

The Covid-19 crisis has hit hotels, forcing owners to rethink their future, which has seen some hotels change hands.

The Fairmont Norfolk, an iconic hotel in Nairobi, said it was closing its doors indefinitely and sacked all employees in a row sparked by the Covid-19 pandemic.

City Lodge Hotel Group plunged into Sh3.64 billion (R486.6 million) loss last year — the first in over seven years and opted to sell off its franchise in Kenya and Tanzania.

South African owners of Nairobi’s Fairview Hotel, Town Lodge, and City Lodge Two Rivers are set to sell the three hotels to Ukarimu owned by real estate investor Actis for Sh1 billion.

City Lodge Hotel Group put up the three Kenyan hotels and Tanzania’s City Lodge Hotel in Dar es Salaam for sale in plans to exit East Africa after barely seven years of operation. It plans to sell the Tanzania hotel for Sh7.3 million.

The company says the East Africa units were loss-making to the tune of Sh2 billion as at the end of last year.