Increased Tourist Traffic Driving up Growth of Hospitality Industry in Kenya
Increased Tourist Traffic Driving up Growth of Hospitality Industry in Kenya
Kenya hospitality industry needs more accommodation facilities which are under construction due to a record high tourists’ flow. The rising number of international visitors in the area in 2023: 2.09 million (2022: 1.54 million) by 35.4% created intensive demand for additional accommodation and hospitality buildings.
Business Overview: Key Statistics and Economic Consideration
Tourism Growth
The bed nights rose by 23.2%, or from 7 million in 2022 to 8.6 million in 2023.
From the year 2023, tourism accounted for 7 per cent of the country’s economic output with the continent being the source of the biggest chunk of tourists.
Future Projections
The Kenyan government’s vision is to host more than 3 million visitors in the country in the following years to come with the forecast that within the next three years, the country will be hosting more than 5 million visitors.
Trends That Are Witnessed in The Hospitality Sector
Hotel Pipeline
There are 31 new hotels being built to increase total rooms to 4,268 by 2024.
Most international hotel brands like Hilton, Marriott International, Radisson Hotel Group and Accor have entered new markets.
Notable Projects:
JW Marriott in GTC Tower, Nairobi with 315 beds.
Glee Hotel with 211 rooms, Pullman Hotel with 162 rooms and M Gallery with 105 rooms in Nairobi.
TUI Group: TUI BLUE Watamu which is an A124-room facility in Kilifi.
Regional Competitiveness
Increase in the numbers of tourists visiting Kenya positions it ahead of regional competitors Uganda and Rwanda but the study shows that the country must continue to expand its market by closing existing accommodation gaps.
The following are challenges facing hotel development
High Financing Costs
- Huge interest rates have posed challenges to developers in accessing cheap credit hence investors prefer treasury bonds and bills.
- Restricted market conditions for real estate companies at the NSE for instance poor performance from Home Africa add to the difficulties.
Project Delays
Construction delays caused by funding shortage issues with key operators can lead to legal and contractual problems with hotel developments.
Arbitration processes may cause some intermittent in the operational sequences of service delivery in hotel chains.
Infrastructure Dependency:
Developers target premises with infrastructure facilities including airport and highways (Jomo Kenyatta Airport, Upperhill, Gigiri, and Westlands).
Strategic Orientations toward Growth
Government Policies
The policies that uphold tourism growth and development of the supporting structures will continue to be significant.
Partnerships and Conversions
The involvement of hotel operators and developers in the transformation of idle or purpose built structures into hotels provide practical solutions to capacity constrains.
Economic Benefits
The expansion of hotel construction will act as a catalyst for economic development through promoting accommodation investments, employment opportunities and enhanced infrastructure will equally be witnessed while benefiting local residents’ income.
Expert Opinions
Mike Macharia, CEO, Kenya Association of Hotel Owners and Caterers:
‘‘It is expected that the number of people arriving can grow much faster than the availability of accommodation requiring additional investment in the hospitality industry.”
Developers are required to have adequate finances to honor the laid down timeframes and also steer clear of any legal issues with the operators.
As Kenya increases on visitor arrivals and looks to the future with interest tourism goals, hotel development will have to be stepped up so that the hospitality industry and Kenya as a tourist destination remains afloat in the Africa market.