Four-star Jadini Beach Hotel, once a gem in the coast tourism circuit associated with politician Kenneth Matiba’s business empire, has been shut and left to rot away — a standing edifice of the tough times facing Kenya’s sun, sea and sand tourism.
The manicured grounds of the hotel, auctioned in 2013 to Simba Lodges by Barclays Bank of Kenya to recover bad debts owed by Alliance Group of Hotels owned by the former Cabinet minister, are being taken over by a jungle, of creeping vines and bushes.
“There are no plans to do anything,” said Vipul Patel, a director of Simba. “Tourism at the coast is in bad shape. Many hotels are closed and several have been put up for sale.”
Mr Patel said that Simba could renovate the property should tourism numbers at the coast rise significantly in the coming years. It is this wait-and-see stance that has seen the hotel continue to decay, ultimately raising the cost of any future renovation.
At the moment, the unoccupied property’s walls are peeling off and its swimming pool unmaintained, painting a general picture of neglect amidst the beautiful scenery at the Diani south coast beachfront.
Observers say that Simba got such a good deal in the transaction that it stands to reap capital gains large enough to offset the opportunity cost of not having an operating hospitality business.
“The land component of the transaction was more important than the hotel business,” said a top hospitality executive who is familiar with Jadini’s history.
“You have 60 acres of land and a beachfront of 300 metres. That is prime real estate,” our source said, adding that Simba acquired the property for Sh900 million.
Mr Patel did not confirm or refute the reported deal price, only saying that Simba bought the property from Barclays in a sale that was handled by advisory firm Deloitte.
The rundown hotel had a four-star rating when it was operational, offering 160 air-conditioned rooms in garden cottages and a three-storey building facing the Indian Ocean.
It also offered standard facilities and services, including a swimming pool, bars, fitness club, and water sports.
The property’s new owners currently run three lodges under the Simba brand, targeting tourists visiting popular game reserves in their respective localities.
These are Naivasha Simba, Samburu Simba and Mara Simba that offer guests the opportunity to see elephants, giraffes, and zebra among other wildlife.
Mr Patel said Simba’s purchase of Jadini was meant to give it a presence in the key beach tourism sector.
The coast circuit accounts for an estimated 50 per cent of Kenya’s annual tourism earnings, making it an important hub for major players in the hospitality industry.
Hotel chains like Serena and Sarova have leveraged their wide network of game reserve and beach properties to attract tourists seeking comprehensive tours of the country.
Tourism at the coast has, however, suffered in the past two years due to insecurity in the region, putting a damper on new investments and renovation of existing properties.
Bed occupancy at coastal beach hotels had dropped 60 per cent as of the third quarter, according to the Kenya National Bureau of Statistics (KNBS).
This was a worse performance than Nairobi’s high class hotels whose occupancy had fallen 28 per cent in the same period.
Mr Patel said the official statistics are playing down the contraction in coast tourism, adding that Nairobi is holding up well despite the increase in new hotels.
The weak demand saw the overall tourism sector record a deeper contraction of 14.6 per cent compared to 3.9 per cent in the same quarter a year earlier.
“The contraction is attributable to both internal and external factors, including insecurity concerns, negative travel advisories by some key tourist source countries and the perceived health risks in Kenya due to the country’s geopolitical location and connectivity with West Africa,” the KNBS said in a statement.
Absolute tourist arrivals dropped 14.9 per cent to 998,069 in the seven months ended July 2014 compared to 1.1 million the year before, underlining the industry’s troubles.
Tourism revenues fell two per cent to Sh96.02 billion last year on the back of a drop in visitor numbers by 29,000 from the 1.2 million arrivals recorded the previous year.
The insecurity plaguing Kenya’s coast tourism circuit is seen boosting its traditional rivals, including Zanzibar, Mozambique, the Maldives, Mauritius, and Seychelles that offer high-end activities including diving and sport fishing.
This negative outlook has prompted the wait-and-see stance adopted by the new owners of Jadini that was once among the popular hotels at the coast, attracting positive reviews from global travel websites.
The sale of Jadini marked the latest shrinkage in the Matibas’ business empire that had built a strong portfolio of companies in the hospitality, manufacturing and education sectors since the 1970s.
The Matibas have lost several of their assets through a mix of voluntary sell-offs and liquidations by Barclays to which the family was heavily indebted.
This preceded the sale of the Matibas’ Hillcrest School in 2011 to a consortium led by Anthony Wahome and Fanisi Venture, a private equity firm managed by Ayisi Makatiani. Barclays sold the school after the Matibas defaulted on a loan that had grown to Sh620 million.
The decline of Matibas’ empire has been linked to several factors, including a pileup of bad debts and the patriarch’s ill health brought by a political fallout with former president Daniel arap Moi.
Mr Matiba was detained in July 1990 as part of a broader plan by the Moi regime to stifle calls for reforms and a return to multiparty democracy.
He was released a year later after suffering a stroke, with his ill health affecting the management of the family’s business in subsequent years.