Eco-lodges, cottages yields up on demand for unique experiences

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People are willing to pay a premium to access the eco-lodges, boutiques and cottages because they feel these will grant them more value for their money.

Mid-last year, a tea plantation owner in Limuru’s Tigoni decided to convert a three-bedroom cottage inside the farm into a hospitality facility.

The facility, dubbed Siri Nairobi, would grant guests in need of a break from the city's noise a space to unwind, enjoy some fresh air and connect with nature.

Shortly after its opening was announced on social media, guests began to make enquiries, expressing an eagerness to experience what the facility had to offer.

"When it was initially opened, guests would have to pay roughly about Sh7,900 to access the facility for a night," says Joan Mwangi, who works at the establishment.

Sh50,000 per night

But as demand increased, Ms Mwangi says the rate to access the facility, which can accommodate between six to 15 people, went up to Sh40,000 a night.

"This was for weekdays. On weekends, people pay Sh50,000 a night because the demand is much higher," says Ms Mwangi.

Within the last two years, Kenya’s hospitality industry has witnessed a dramatic change in buyer preferences, with local tourists now seeking out places where they can escape from the confines of their homes to explore the beauty of nature.

Niche offerings such as cottages, boutiques and short-term vacation rentals, which were not performing very well in the market, are now recording higher occupancy rates, outperforming more mainstream hospitality facilities such as hotels.

Despite the comparatively high rates, not a single weekend passes by without new visitor bookings at Siri Nairobi for instance. The proprietors are even considering setting up more similar establishments, to meet rising demand.

"Many clients now prefer private arrangements, where one travels in the company of close friends or family. When they get to the destination they still prefer to hang out with the same group and mingle less with strangers," says Alex Njage, Head of Commercial Property at Bowmans Kenya.

This emerging trend is attracting the attention of investors, many of whom are now putting up structures that take into account the shifting buyer preferences.

“The thing with boutiques and high-end camps and lodges is that you actually won’t hear much about them in terms of advertising but the amount of money being invested there is a lot,” says Mr Njage.

Stiff competition

Competing to get customers, mainstream hoteliers are having to embark on the refurbishment of their establishments to respond to the changing needs of the consumers, cognisant of the fact that tourists are now seeking accommodations that prioritise personalised experiences.

“Being a high-end segment, the yields on the niche facilities are higher, ranging up to 12 percent. As a result, we are seeing a larger pool of niche products being created, from which consumers can choose," notes Mr Njage.

Sustainability has also become a key theme in the country’s hospitality industry, with unique and experiential accommodations such as eco-lodges, glamping sites, and cultural homestays gaining popularity among travellers seeking authentic experiences.

“Buyers are now attracted to, and want to experience unique and exclusive settings that offer them a chance to become one with nature,” says Nickson Otieno, a sustainability expert and CEO of Niko Green.

As a result, developers are now integrating sustainable practices such as eco-conscious designs, and natural lighting, among others in their projects.

“This is leading to collaborations between investors and local communities that are fostering sustainable growth in the market,” states Mr Otieno.

The downside of the shift towards niche products is that mainstream hotels are recording lower occupancy rates, with a number of them announcing closure as a result.

Robinson Muthomi, a tours and safaris operator, says that many of his clients ,for instance, have been requesting that he book them in with boutiques and cottages, which they feel are more intimate.

“There has been a general slowdown in the number of booking enquiries for hotels, even though these are more affordable than cottages," says Mr Muthomi.

Ignoring the cost factor, the tours' operator notes that people are willing to pay a premium to access the eco-lodges, boutiques and cottages because they feel these will grant them more value for their money.

“Though they are generally more expensive, these developments are interestingly generating more attention than mainstream hotels,” says Mr Muthomi.

Sector recovery

That notwithstanding, the entire hospitality sector seems to be on a recovery path, with the latest market report from real estate firm Knight Frank Kenya indicating that the sector outperformed all other asset classes to become the strongest performer in 2023.

In the year under review, hotel occupancy rates increased by 32 percent, from a similar period in 2022, driven mostly by a 29 percent increase in visitor arrivals between January and October 2023, compared to a similar period in 2022.

The performance was also attributed to government intervention through the establishment of favourable policies such as the free visa entry policy, a significant influx of domestic travelers, as well as notable investments in the development of new smaller hotels.

Growth enablers

Growth in air connectivity, good marketing campaigns and a relatively stable political environment have also seen the country get positive reviews on platforms such as TripAdvisor, Rough Guides and World Travel, thus boosting the growth of the industry.

Advancements in infrastructure are also leading to the growth of niche tourism segments, with major bypasses such as the Western Bypass, Waiyaki Way and Southern Bypass for instance easing traffic into places such as Limuru, Kiambu county that are attractive to visitors.

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