The supply of upscale hotel rooms in Nairobi is set to increase as local and global hotel properties plan to enter the market between now and 2014.
There are several hotel developments in the pipeline currently, with more investments expected as the number of tourists visiting the city continues to grow. The rising number of visitors is the main driver of demand for accommodation and conference facilities, which is expected to strengthen further in the coming years. “Several global hotel chains are expected to enter the market in the coming years as the number of tourists visiting Nairobi continues to grow,” says a report by HVS London, a global hospitality services consultancy. There are at least eight hotels set for completion in Nairobi between the third quarter of 2012 and 2014.
According to W Hospitality Group, a Lagos-based consultancy, Nairobi is seeing more activity than it has for many years. The firm, in a hotel pipeline research, says a 200-room Lansmore Hotel – Lonrho’s new brand – is on the drawing board for Nairobi. Hotel properties under construction currently include the upscale 200-room Kempinski Nairobi, at Chiromo, set to open doors in the fourth quarter 2012. The property is being developed by Simba Colt Motors.
The mid-scale hotel market will be supplied by the 96-room Best Western in Hurlingham to open in fourth quarter 2012; the 126-room Park Inn (by Radisson) in Upper Hill set to open in 2013; and the 128-room Leisure Park Hotel in Arboretum to open in 2014. The 244-room Radisson Blu Hotel in Upper Hill and a 52-room Serena Nairobi expansion, which will open in 2013 and 2014 respectively, will service the luxury market.
Another under construction is the 98-room 14 Riverside Hotel along Riverside Drive, categorised boutique, set to open in the third quarter of 2012. Also in the pipeline is Three Cities Hotel, a South African hotel brand. The current total room count in Nairobi’s upscale hotel market is about 5,000 with recent additions including 271 rooms opened in 2009, 421 rooms in 2010 and 70 rooms in 2011, according to the HVS research.
Supply of rooms in the upscale market is expected to grow over the next few years but with limited impact on occupancy levels and average rate growth. “We are aware of more than 1,100 rooms which are scheduled to enter the market before 2014,” said Lucy Payne and Sophie Perret in the HVS hotel market snapshot for Nairobi.
Other hotel properties anticipated will contribute to this supply – including outside of the upscale market – is 150-room Boma Hotel by Red Court, 172-room Eka Hotel and 172-room Eastland Hotel. The World Bank in a June Kenya economic update said Kenya’s trade in services has experienced growth, attributed partly to increased commercial presence of service suppliers from other countries through ownership or lease of premises such as hotel chains.
Government efforts to boost bed capacity seem to bear fruit as one of three specific goals for 2012 in the Vision 2030 is to increase hotel beds from 40,000 to at least 65,000. The government intended to revamp business-visitor offering by attracting high-end international hotel chains into the country. The number of bednights in Nairobi increased by a compound annual growth rate (CAGR) of 6.1 per cent in the decade to 2010 with the main source market being the UK, US and Italy. Arrivals from these markets picked up by 17, 11 and 10 per cent respectively in 2011.
Arrivals from China and India grew significantly by 31 and 24 per cent respectively in 2011, partly due to large construction projects such as roads being undertaken by Chinese firms. “Conference is one of the most rapidly growing sub-sectors in Nairobi, and indeed Kenya,” say the HVS report. Leisure tourism is however being impacted by the kidnappings happening in Kenya’s beaches, as source markets issue travel advisories to their citizens from visiting certain parts of the country.