As Tourism Grows, Business Booms for Kenya’s Budget Hotels

As Tourism Grows, Business Booms for Kenya’s Budget Hotels

On all major roads leading into Nairobi, brand new budget hotels dot the landscape with more under construction.

The boom is evident in the Kenyan capital and its environs where trendy new hotels have come up in response to growth in tourism. These are mostly three-star hotels that offer excellent service. The pricier five-star hotels mainly target high-end clientele with rooms ranging from $210 to $660 for a suite.

The increase of two- and three-star hotels is encouraging people from all over the world with limited financial resources to visit Kenya.

But there’s room for more hotels, tourism officials say.

“We ought to have increased the bed capacity to more than 65,000, but currently industry players estimate that the figure stands at 55,000 beds,” said Kenya Tourist Board Managing Director Muriithi Ndegwa.

The boom in tourism continues despite pending court cases against President Uhuru Kenyatta and Deputy President William Ruto at the International Criminal Court. The two leaders are accused of crimes against humanity arising out of the 2007-2008 post-election violence in Kenya. During his tour of Africa, U.S. President Barack Obama said that the cases meant that the “timing was not right” for him to visit Kenya. Addressing reporters in Pretoria, South Africa, on June 29, Obama said Kenya was “still working out issues with the international community.”

Still, Kenya remains one of the most popular tourist destinations in Africa. Kenya recorded 1,095,945 tourist arrivals in 2010 –  the highest number ever, according to the Ministry of East African Affairs. This was a 15 percent increase over the 952,481 tourists who visited in 2009. Some came to enjoy scenic views, see historic structures and relax at the coastal beaches. Others come for internships and business meetings.

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A business traveler from the U.S. staying at the five-star Sarova Stanley Hotel in Nairobi said the hotel was expensive but had good service. “It’s very pricey but the standards match the pay,” said Paul Johnson. “However, the company is paying for this; if I came by myself, I would definitely go for a three-star (hotel) that’s within the capital.”

John Maina, the front-office manager at the three-star Sunrise Hotel in Nairobi, said business has been good. Sunrise is just seven months old but already attracting 50 to 100 international guests every month. The cost of conference packaging is an important distinction between the three and two-star hotels and their five-star counterparts. “It’s very competitive and the facilities we offer for such conferences rival those of five-star hotels,” he said.

Sunrise Hotel does not have a gym or swimming pool – facilities that are taken for granted at five-star hotels. But Maina pointed out the well-decorated rooms with TVs and Internet access.

Advertising is one challenge that startups such as Sunrise Hotel face. “It’s really difficult to advertise because we are a new hotel,” Maina said. .”Promoting the hotel in our current location is a challenge.” He quickly added, however, that they have not had any incident of insecurity.

The location becomes a matter of concern because budget hotels are generally located in the less-secure sections of Nairobi. The big five-star hotels enjoy an advantage in this regard.

The Hilton, Sarova Stanley, and Norfolk hotels all occupy strategic locations within easy reach of any location in the central business district of Nairobi. While the Hilton and Stanley are inside the city center, the Norfolk is located next to the University of Nairobi, a short walking distance from the main business area.

The few budget hotels offering a reasonably high level of services within the central business district are located in less-prime locations that were previously no-go areas for tourists. Today, it is not unusual to find tourists checking into these hotels. Their security is assured so long as they use taxis to move around and avoid the riskier sections of the city, said Nairobi taxi operator Mike Muthee.

Tourism being a major foreign-exchange earner, the new Jubilee government says it will prioritize tourism as one of the key pillars of the country’s economic growth, in accordance with its manifesto. The government is keen to see tourist numbers double every year.

Ongoing regional integration efforts are another critical factor. It is now easier for a tourist to get round East Africa. With plans to have a single tourist visa in high gear, East Africa as a whole is likely to see more visitors flooding in, according to East African Business Council chairman Vimal Shah.

The fact that Nairobi is a hub of economic activity in East Africa has attracted many multinational companies. Companies that have announced plans to set up shop in Kenya or set up a regional hub include Pfizer, PricewaterhouseCoopers, IBM, Google, Bharti Airtel, Nokia/Siemens, and Huawei.

The expansion of the road network in recent years has enabled easier movement, promoting tourism and directly benefiting budget hotels outside the city center. The roads have made it easy for visitors to stay in budget hotels offering a serene environment away from the pollution and noise of the city center, while still giving access to airports and cultural centers.

But it is not just Nairobi that is benefiting from this boom. New hotels that cater to the growing numbers of tourists are also coming up in other towns and near national parks and game reserves. These include the Sun Sweet Hotel in Mombasa, Mahali Mzuri in the Maasai Mara and the Golden Springs Hotel in Kiambu County.