INFLUX

Hotel oversupply to stunt investments

In Summary

•Nairobi remains the key investment destination for global hoteliers, with 3,167 rooms, representing 74.8 per cent of the total number of rooms slated for the Kenyan capital

Villa Rosa Kempinski is among the latest hotels in Nairobi
Villa Rosa Kempinski is among the latest hotels in Nairobi
Image: FILE

There is an oversupply of hotel rooms in Nairobi, placing the city at the bottom of hospitality investment markets in the East African region, a leading hospitality expert has said.

Speaking during the onset of the Africa Property Investment Summit, HTI Consulting’s Wayne Troughton said both Nairobi and Kigali had low hotel investment prospects due to higher supply of hotel rooms compared to demand.

“In East Africa, the top investment hospitality markets are Kampala, Addis Ababa and Dar es Salaam, whilst the bottom are Nairobi (over supply) and Kigali (over supply and limited demand),” he said.

This comes even as 27 global hotel brands plan to open new or additional hospitality facilities in the country over the next four years.

The 2019 Hotel Chain Development Pipeline in Africa report shows the new facilities will bring to the market 4,232 new hotel rooms by 2023.

“Over in East Africa Kenya, Tanzania and Ethiopia continue to be the stars, much of their growth driven by international and domestic tourism,” the report stated.

Nairobi remains the key investment destination for global hoteliers, with 3,167 rooms, representing 74.8 per cent of the total number of rooms slated for the Kenyan capital.

According to the Pipeline report, 67 per cent of the proposed hotel rooms are already under construction with the remaining 33 per cent in the planning stage.

Kenya is estimated to have a total of 68 global branded hotels among them, Radisson, Accor, City Lodge, Hilton, Swiss International, City Blue and Marriott.

This is expected to increase with the current investment trend.

Troughton however said investors looking to set up in the country should now shift focus to mid-scale urban hotel assets in close proximity of private organisations and conferencing centres.

“The most popular investment opportunity at the moment includes midscale urban hotel assets of 150 rooms, located close to corporates, conferencing centers and transport nodes,” he said.