Hospitality industry players have said that the sector is doing well at the moment despite some major players in the industry opting out of the Kenyan market.

Last week, media reported that UK-based private equity fund, Actis, was seeking to sell 100 per cent of its Kenyan restaurant chain, Java House, for an undisclosed amount.

Unofficial reports put the sale price at $40 million (Sh4.9 billion). Java is the largest coffee house chain in Kenya with over 70 branches across the country.

Actis has owned Java House since 1999 when it bought restaurant chain from Dubai-based Abraaj Group. Java’s imminent sale come barely two weeks after Hilton Hotels closed its Nairobi hotel permanently after operating in the city for over 50 years.

While many observers speculate that these events could be linked to hard economic times in the hospitality industry, experts and industry insiders say nothing can be further from the truth.

According to veteran hotelier, Mohammed Hersi, the hospitality industry in the country is doing well at the moment hence the decision by Actis to sell Java House is most likely motivated by other business considerations.

“Everything in life is for sale as long as the price is right. If a business is over 20 years old, it’s most likely that the initial founders could now be heading to their sunset years and they want to cash in,” he Hersi said.

“I wouldn’t say it is tough times. If anything you don’t sell a business when times are tough, you sell a business when times are good,” Hersi said.

Business environment

He said with Covid-19 largely out of the way, a successful election held last year and with the opposition warming up to the government, the business environment for the hospitality industry is quite good at the moment.

A similar opinion was given by James Kitavi, chief executive of Kenya National Chamber of Commerce and Industry (KNCCI), Mombasa. He said that in December, hotels in Mombasa and many other parts of the country were fully booked, a sign that people have the spending power to go on holiday. “I think they (Actis) are selling for their own reasons.

Hospitality industry in Kenya is one of the industries that are quickly recovering from the downturn of Covid-19,” Kitavi said.

“You cannot say that they are closing because people are not able to afford a meal at Java. This is because of their personal business reasons, it has nothing to do with the recovery of the sector,” he added.

Churchill Ogutu, a senior research analyst at IC Group, says Actis could be looking to sell Java simply because it makes business sense on their part and not because they are running away from a bad business environment.

“Private Equity Funds usually have an exit time frame. Probably they (Actis) are exciting at an appropriate time in their view or they are just trying to look at other investments,” he said.

According to Ogutu, Java’s niche market which it targets middle to upper-income earners in urban areas, is not doing too poorly despite the rising cost of living. “Probably they have made their money.

They are now exiting and looking at other ventures,” he said. In the recent years, Kenya has witnessed significant growth in fast food chains with global players such as KFC, Subway, Burger King, Cold Stone Creamery, Toridoll, and Domino’s Pizza setting shop in the country.