Global investors defy advisories to set up new business in Kenya

What you need to know:

  • Recent data shows that Kenya is set to host nine new international hotels which are planning to put up 1,437 rooms to cater for growing demand for travel and accommodation in the country. Among leading brands that have invested heavily in the recent past is Hemingways.
  • Ms Murungi also acknowledges that terrorism and insecurity have adversely affected business but is confident that the joint promotions by the sector and the Kenya Tourism Board are bearing fruit.

Billionaire British businessman Richard Branson is miffed that his nation’s government has been issuing travel advisories cautioning its citizens against visiting Kenya over terrorism fears.

This week, he took to the Internet and gave the British government a piece of his mind over the advisories – which London and Washington insist are necessary – but which have rubbed the government in Nairobi the wrong way.

Sir Richard is upset that the Western powers appear to be applying double standards when it comes to issuing travel advisories against Third World countries “blighted by acts of terrorism”.
“While the government has a responsibility to highlight the facts, advising against all non-essential travel could destroy Kenya’s economy, which depends hugely on tourism,” charged Sir Richard who owns Virgin Atlantic among a string of businesses.

Sir Richard is one among a sizeable number of investors with leading global brands who have set up shop in Kenya against all odds. Last year, he launched a top-of-the-line tented camp in the Maasai Mara called Mahali Mzuri.

Set within Motorongi Conservancy, Mahali Mzuri joined Virgin Limited Edition – spread across eight exotic locations around the world, designed to offer high-end luxury holidays, serenity and unique retreats.

In Nairobi and other parts of the country, investors in the hotel industry and in other sectors are investing billions in new businesses – a stark contradiction to the image painted of Kenya by Europe and America.

The contradiction was underlined by the fact that the attacks in Lamu last month did not dampen European and American investors’ interest in the Kenyan eurobond oversubscribed by 400 per cent where the government was borrowing from international markets.

Host new world-class hotels
Recent data shows that Kenya is set to host nine new international hotels which are planning to put up 1,437 rooms to cater for growing demand for travel and accommodation in the country. Among leading brands that have invested heavily in the recent past is Hemingways.

“We were driven by an ambition to create a truly international luxury boutique hotel and to develop an area outside the city centre where both the corporate and leisure (tourist) markets would enjoy. The Nairobi project has been a great success already,” Hemingways Holdings Chief Executive Officer Alastair Addison told the Sunday Nation.

The chief executive, however, said that their Watamu property has been adversely affected.

“Our Nairobi and Ol Seki Mara properties are doing very well. The main impact is at the coast with Hemingways Watamu where business is down over 50 per cent and we have had to close 60 per cent of the rooms; jobs are at risk,” said the hotel executive.

A new entrant in the Kenyan market is Kempinski, the oldest European hospitality management company, with a legacy of more than 100 years.
In Kenya, Kempinski is partnering with Simba Hospitality Coporation.

“Kenya is a business hub, with a promising economic growth, fantastic weather, great hospitality personnel and the best safari experience in the world. Kempinski felt confident to come to the market with two properties within the same year; Villa Rosa Kempinski (Nairobi) and Olare Mara Kempinski (Maasai Mara),” said the chain’s director of sales and marketing in Nairobi, Anne Murungi.

Ms Murungi is bullish about Kenya’s prospects: “Kenya is the right place to be for someone with an eye for business. The financial, ICT sectors and a number of multinationals are investing in Kenya. This is the hub of Africa. I must say the reception by the market has been phenomenal.”

The chain’s opulent Nairobi establishment is nestled between the city centre and the Westlands business hub.

“In Kenya, over and above the luxurious experience for both the business and leisure guests, we boast to be the only five star luxury hotel in East Africa to have five restaurants within its premises. In the Mara, we have captured the same luxury flair, even in a safari setting,” added the spokeswoman.

Confident
Ms Murungi also acknowledges that terrorism and insecurity have adversely affected business but is confident that the joint promotions by the sector and the Kenya Tourism Board are bearing fruit.
Johannesburg-listed City Lodge Hotel Group has also been allowed by the Competition Authority to fully acquire Nairobi-based Fairview Hotel and Country Lodge, boosting its Africa expansion plans.

Investors are also eying the plush Runda estate, which hosts the United Nations offices in Nairobi and the US Embassy in Kenya, for the hotel business.

A company associated with former Attorney-General Charles Njonjo is set to build a Sh1 billion estate in Runda that will include a hotel, an office block and a shopping centre, targeting business tourists and diplomats.

In addition, an English Premier League club owner plans to open a low-budget hotel in Westlands in June next year with Kenya being the launch pad for his chain’s expansion in the region.

Mr Tony Fernandes, a Malaysian tycoon whose net worth is estimated at $650 million (Sh57.2 billion), is set to open the doors of the first African outlet of his global Tune Hotels business in Nairobi.

Tourism Cabinet Secretary Phyllis Kandie has also endorsed Kenya’s position as Africa’s ultimate business destination.

“Investments always follow where there is a promise of maximum returns. The current interest in Kenya by investors shows that they are looking beyond the present challenges, confident of a sector that will bounce back and flourish,” said the Secretary.

“As a former investment banker, the recent rating of Kenya by Standard & Poor (Financial Services) speaks well of our investment climate and prospects.”

Other international hotel chains looking to open in Kenya are Marriot, easyHotel by Lonrho and Hilton Garden Inn, a budget accommodation by Hilton International.

By setting up base in Kenya, Tune hotels will be joining the likes of Radisson Blu, and Best Western hotel chains that have picked Kenya as an opportune investment destination.