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Local hotels are feeling the heat of aggressive new investments by international hospitality brands, coupled with the ongoing economic slowdown. 

Wrangling among shareholders, failure to adapt to changing needs of a demanding clientele and poor management is not helping many Kenyan-owned establishments either. 

Jacaranda in Westlands, owned by the family of the late Kiambu businessman and politician Njenga Karume, is sinking.

Trustees left by Karume to manage his property have been in constant fights with managers and a family that cannot agree on the way forward.

Auctioneers have put up notice of the sale of the hotel scheduled for January 22 after a court on Tuesday declined to stop the auction to recover a Sh257.6 million loan by Guaranty Trust Bank. 

PrideInn Group, the fastest growing local chain of hotels with investments in Nairobi, Mombasa and Kisumu, says it is in the process of acquiring Azure Hotel and all was well in their quarters contrary to social media reports. 

“How can PrideInn dispose hotels in Nairobi that they actually own? The group has eight hotels and we will soon grow to nine if we get Azure,” says the group public relations consultant Joseph Kubai.  

Economists say mergers will continue and there might be a decline in the growth of the industry especially due to the international threat of terrorism. 

US-Iran spat

“The recent spat between the US and Iran is likely to hurt tourist arrivals from the west and by extension cause a decrease in investments in the industry,” says Charles Mugendi, senior lecturer Kenyatta University School of Economics. 

All is not well at Windsor Golf Hotel and Country Club on Northern bypass, Kiambu county, owned by the family of the late minister John Michuki. Family members have been at loggerheads over their father’s estate.

The resort is sending 87 employees home, with another 100 set to go home by March, with management citing “tough economic times” for their action. 

Boma Hotel, owned by the Kenya Red Cross is under receivership by National Bank since last month.

Managers who sought anonymity denied the facility was facing financial problems but confirmed it is under a new administration appointed by the board to steer it into profits this year. 

Changes are also expected at Southern Sun Mayfair and its sister eatery Golden Spur Steak Ranch in Westlands which could close this month. 

A staff who did not want to be mentioned confirmed Mayfair will close on January 31 for renovations.  

Word on the grapevine is that a new investor has already acquired the property. 

Mugendi advises investors in the sector to be cautious and to diversify their products to other sectors. 

An economist and co-founder of consulting firm Gulf Hub, George Abwajo links the shake-up in the industry to the current state of the economy. 

To settle its huge debt obligations, he says, the government has been forced to slash recurrent expenditure, including hotel bookings and conferences. 

Nairobi has lost its place in the meetings, incentives, conferences and exhibitions (Mice) sub-sector to Kigali, a factor biting hospitality sector earnings.

Abwajo argues that the closure of hotels has also been caused by aggressive expansion by smaller hotels  which are curving a huge share of the Mice sub-sector. 

Lay-offs and mergers

According to travel expert Nicanor Sibula, 2020 will be just as tough as Kenyans grapple with the economic slowdown and the government’s austerity measures. 

“Expect more mergers and restructuring in the sector as hotels seek to adjust to the situations in the economy,” says Sibula.  

While many locally-owned hotels are under threat of closure, there has been a rise in the number of international hotel brands launching new properties or expanding to more counties.

About 30 global hotel brands have announced plans to open new or additional hospitality facilities in Kenya over the next five years, cementing the country’s position as East Africa’s business hub. 

The new hotels will bring to the market more than 4,500 new hotel rooms by 2023, according to 2019 report of Hotel Chain Development Pipeline in Africa.

Sheraton, Ramada, Hilton, Best Western, Radisson, Marriott and Mövenpick are among the international brands scheduled to open hotels in Kenya during the next five years. Hilton East Africa (EA) development director Samantha Muna says Hilton has introduced two new brands, bringing their establishments to three in Kenya — Hilton Nairobi, DoubleTree by Hilton Nairobi Hurlingham and Hilton Garden Inn in Jomo Kenyatta International Airport—with two more under development. 

“We are actively perusing further opportunities to expand our portfolio, in partnership with local owners and investors, particularly in urban locations within Nairobi, Mombasa and other key locations across EA where we see significant potential,” she says. 

Mariott International began by opening its first property in Hurligham with 96 spacious modern rooms all designed for the modern traveller.

In partnership with a global hotel management company Aleph Hospitality, Marriot last year signed a franchise agreement with Marriott International for a new, 125 room Protea Hotels by Marriott in Kisumu due to open in 2022. 

The Dubai-headquartered hotel has also opened the Best Western Plus in Westlands, bringing the total number of their facilities under development to four. 

Best Western global hotel brand also has seven hotels lined up, five of which will be in Nairobi, one in Naivasha and another in Kisumu. 

City Lodge group of hotels has recently opened a new branch at Two Rivers with 171 modern and comfortable rooms adding to spaces in the city.  

The other big boy in the block is the Hyatt Africa hotel, which has a plan to double its number by 2020. The American multinational last year entered into a management agreement with Kanha Ltd for the first Hyatt-branded hotels in Nairobi, Kenya. 

Hyatt Place Nairobi/Westlands and Hyatt House Nairobi/Westlands will consist of 233 guest rooms, which are expected to be open early this year.