More hotel chains are seeking new ways of rebounding from the low pandemic season, by selling some of their units to investors eyeing guests paying for short and longer-stay accommodation.
CityBlue, which has over seven hotels in Africa, is the latest to opt to move away from its hotel and resort model into something its owner calls ‘aparthotel’.
An aparthotel is a merger of hotel and residence apartments, and CityBlue is riding on the change to open up both a real estate opportunity and new bed space for traditional hotel businesses.
It is a concept that picked up fast in Mombasa and Kisumu a few years ago. Buyers invested in hotel apartments, which were managed by one company, and the owners got returns monthly or yearly.
Now CityBlue Hotels is dipping its feet in the Nairobi waters with its first prototype. The 249 serviced and furnished apartments with one, two, three, and four bedroomed units, called Skynest Residences by CityBlue, targets people booking for both short-stay and extended-stay.
Owned by the Diar Group, it is selling some of the units to buyers, to supplement its income from hotel services.
“The hotel and residences model is globally understood and requires a certain specialism of management to be able to execute it. We hope that we are in the right place at the right time,” said Jameel Verjee, the founder and CEO.
Extended stay hotels are becoming popular in the West, with companies such as Edyn, US-based Extended Stay America attracting multibillion funding to grow the segment.
In Kenya, the market is also attracting new entrants such as Ascott, a Singapore company which opened 162 units in Nairobi’s Kilimani. It targets expatriates, business executives and other guests seeking long-stay accommodation.
The extended-stay hotel rooms are becoming more affordable housing for expatriates on short assignments. They also come with guaranteed safety.
CityBlue’s model, which it says is a blend between hotels and Airbnb, offers spacious furnished apartments that allow guests to cook, host friends while hosting an in-house high-end restaurant, onsite staff and management of the units.
The company also offers to manage the units for buyers who take them up as investments and want to let out the units as part of the hotel.
Mr Verjee said most owners of units at Skynest Residences by CityBlue see the value in investing for CityBlue to operate, a growing trend that has seen the hotel manage most of the units it has sold off.
“Skynest Residences by CityBlue offers an excellent return on investors to its counterparts. This takes into account our costs,” he said.
He left law practice in the UK where he spent five years at one of the top law firms to venture into business independently and with his family in Europe, the Middle East and Africa across multiple sectors.
He founded the hotel business in sub-Saharan Africa where CityBlue hoped to set up three and four-star accommodation across Kenya, Tanzania, Rwanda, Ghana and Mauritius.
It has lined up eight hotels in Dar es Salaam in Tanzania, Kigali (Rwanda) and an undisclosed city in Maurituis, two in Accra (Ghana) and three in Kenya including CityBlue Creekside Hotel & Suites, Mombasa, Divine Residences by CityBlue and Skynest Residences in Nairobi.
The eight hotels with combined 656 rooms have lifted the company profile to top 10 hotel chains which account for 80 percent of rooms scheduled to be open in 2022 and 2023 in Africa.
The 3 and 4-star accommodations are built for business travel, conferences, team building, short breaks, outdoor events, and weddings.
Diar Group plans to use the new model to muscle its way into the space of bigger brands like Accor, Marriott International, Hilton, and Hyatt endearing itself to the local traveller who has sustained the tourism sector during the pandemic.
To achieve this ambitious growth the company says it has built in flexibility in its business model where it can lease a turnkey hotel or an existing hotel and renovate; manage mid-market hotels or franchise the CityBlue brand to a property that meets its criteria.
For instance, it has partnered with Valor Hospitality Partners, a global, full-service hotel management company to operate its Divine Residences by CityBlue in Riverside, Nairobi.
Kenya National Bureau of Statistics data shows travel account receipts jumped from Sh15.2 billion in the first quarter of 2021 to Sh22.4 billion between January and March this year.
The earnings jumped by Sh7.1 billion or 46.9 percent even as the number of visitors’ arrivals through Jomo Kenyatta International Airport and Moi International Airport rose by 85.1 percent from 121,739 in the first quarter of 2021 to 225,321 visitors in the first quarter of 2022.
Kenya’s tourism sector has rebounded on a sharp decline in Covid-19 infections and hospital admissions which made the government relax coronavirus restrictions, lifting requirements for compulsory wearing of face masks in open places and ending quarantine measures.