French development institution Proparco has extended a $20 million loan to Kenyan-based Hotel group, TPS Eastern Africa, to help the hotelier refurbish and expand some of its properties in the region.
TPS Eastern Africa, the owner of Serena hotels, lodges and tented camps, said the loan will mainly be used to expands its flagship Nairobi Serena Hotel that accounts for nearly a third of its Kenyan accommodation business.
Mahmud Janmohamed, TPS managing director, told Business Daily that the loan will be used to build new conference and banqueting facilities on the Nairobi hotel. He said it will also add 32 new rooms and construct new food, beverage and meeting facilities at the Kampala Serena Hotel.
Kenya’s tourism industry has come under heavy challenges due to frequent terror attacks from Al Quaeda-linked Somali militants, Al Shabab. The attacks have lead to tourist source countries like the Us and UK placing travel advisories for their citizens to maintain only essential travel to Kenya.
The sector, which contracted 7.5 percent in the first quarter of this year, is however showing signs of recovery after a show of confidence by US President Barack Obama when he visited the his ancestral nation in July.
These challenges pushed TPS to issue a profit warning for its 2014 financial year performance. The Hotel Group which also operates in Tanzania, Uganda, Rwanda and Mozambique, posted a loss of 139 million ($1.34 million) for the six month to June.
The Dar es Salaam Serena Hotel is also scheduled to undergo refurbishment and extension of the dining areas, spa and public areas starting January.
Proparco has a long standing relationship with TPS and hold a 5.98 percent stake in the Hotel Group.
“Our successful collaboration with Proparco… goes back to the redevelopment of the then Nile Hotel in Kampala which is now the Kampala Serena Hotel,” Janmohamed told Business Daily.
“Proparco joined the project as equity partners and lenders… the loan has been fully repaid and Proparco continues as an equity partner.”
