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Hotels face Sh800m hit over Dusit attack

dusitd2 Hotel
Part of dusitd2 Hotel in Nairobi. FILE PHOTO | NMG 

The effects of a terrorist attack in January at the DusitD2 Hotel complex and offices are set to affect this year’s hotel earnings, a report by audit firm PwC on the tourism industry projects.

The report dubbed Hotels Outlook 2019 released Wednesday has predicted a 13.4 percent dip in visitors coming to Kenya in the wake of the attack at 14 Riverside in Westlands, Nairobi, that led to the death of 21 people, and travel alerts issued against Kenya by countries like the UK and US thereafter.

The lower tourist numbers, the report estimates, will lead to a 1.6 percent decline in room revenues to $503 million (about Sh51.8 billion) this year when compared to $511 million (about Sh52.6 billion) in 2018.

However, PwC reckons that the effects of the dusitd2 attack are only temporary as it projects that sector revenues will then increase significantly in 2020 by 12.1 percent to hit $564 million (about Sh58 billion).

“Assuming that the security situation remains stable and tourism grows, we look for real GDP (gross domestic product) to grow faster beginning in 2020 and to average 5.8 percent compounded annually for the forecast period as a whole,” PwC says.

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Notably, the actual hotel occupancy rate for 2018 was 53.2 percent against PwC’s projected figures of 49.3 percent. Recorded guest nights were also 3.9 million, above the expected 3.6 million, while there was a 14.6 percent increase in room revenue above the firm’s projection of 5.7 percent increase.

“The increase in international tourist arrivals in 2018 demonstrates Kenya’s attractiveness and reputation as a destination. Unfortunately, the period of peace and security was interrupted when the country experienced an attack at a hotel and office complex in Nairobi in January 2019,” the report said.

The firm noted that aggressive marketing under the Magical Kenya campaign, more flights to Kenya by Qatar Airways, Air France and Kenya Airways, improved transportation within Kenya, and a convenient e-visa process that is available to travellers from most countries were major factors driving growth in 2018.

The uptake of vacation rental site Airbnb grew by 68 percent in Kenya in the past few years, as tourists preferred the popular homestay accommodation model to hotels. The report said the growth in demand for Airbnb is set to continue cutting into the traditional hotel market, threatening their existence in the process.

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