A Qatari-backed private equity fund has bought Crowne Plaza Hotel for an estimated Sh4.6 billion from tycoon Nazir Ahmed Akbarali amid heightened deal making in Kenya’s hotel sector.
Kasada Hospitality Fund, which is backed by the Qatar Investment Authority (QIA) — the country’s sovereign wealth fund—has fully acquired the Nairobi-based hotel.
The deal adds to Kasada’s asset acquisitions on the continent after snapping hotels in Rwanda, South Africa, Senegal, Cameroon and Namibia over the past 18 months.
The private equity fund enters Kenya in a period when top hotels have either closed shop or witnessed ownership changes as the sector recovers from Covid-19 travel curbs.
A transaction advisor who participated in the Crowne Plaza deal and who spoke to the Business Daily on condition of anonymity said the deal is worth Sh4.6 billion and has received regulatory approval.
“Crowne Plaza was sold but the owners have still not received the payment in full,” said the advisor. “Plans to sell the hotel have been on the table since 2020. The hotel was struggling with bank debts.”
The hotel was opened in Nairobi’s Upper Hill area in 2010 and tapped the Crowne Plaza brands under the InterContinental Hotels Group.
Later in 2017, the owner Mr Akbarali built a Sh1.1 billion mixed-use property offering office space and accommodation dubbed Crowne Plaza Annexe.
The 15-floor Crowne Plaza Annexe is located next to the hotel and targets business travellers as well as companies seeking office space in Nairobi’s Upper Hill financial district.
Crowne Plaza is owned by Golden Jubilee Limited where tycoon Akbarali owns 97.5 percent and Anish Akbarali 2.5 percent, according to regulatory filings seen by the Business Daily.
The owners had targeted selling the hotel in early 2020 but the plans were scuttled by the Covid-19 pandemic, which triggered a travel slump.
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 as governments around the world restricted the movement of people, including through the closure of airspaces, to curb the spread of the coronavirus.
They bounced back to Sh146 billion last year, with the number of hotel nights occupied by Kenyan travellers doubling during the period.
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.
A number of top hotels, including Hilton, InterContinental, and Laico Regency in Nairobi’s city centre, stopped operations amid the coronavirus economic fallout. Some hotels changed hands.
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.
For Crowne Plaza, the sale came amidst a fight with the Kenya Revenue Authority (KRA) over taxes.
The taxman made a claim of Sh228 million, including for transfers made to owners of the hotel, but Mr Akbarali said the payments were Sh2.2 billion soft loans from friends and family used to build the hotel.
The hotel said it was common for members of the Muslim community to advance funds to their kin and friends for purposes of setting up business and that such agreements are out of trust and hence not reduced in writing. The tax appeals tribunal said the KRA was right in demanding the money from Crowne Plaza.
For Kasada, the deal offers the fund a piece of the Kenyan hospitality market. The fund was launched in 2018 with the backing of the Qatar Investment Authority, which has more than half of its assets in private equity and listed shares as it chases higher returns.
It was also backed by French group Accor.
Kasada Hospitality Fund raised $500 million (Sh60 billion) in April 2019, with Qatar Investment Authority providing $350 million (Sh42 billion) and Accor providing the balance of $150 million (Sh18 billion).