Cytonn’s Chief Investment Officer Elizabeth Nkukuu has said the hospitality sector in the country has remained attractive due to Kenya’s position as a regional hub for East and Central Africa, and the attractive tourist destinations.
Nkukuu said the move has led to an increase in the investments in serviced apartments and hotels.
According to Cytonn’s Hospitality Report 2016, Nairobi and Mombasa led the way in the total supply of both hotel rooms, with a combined market share of 63.4% with Nairobi having the highest occupancy levels in the market at 51%.
The Maasai Mara region emerged the best performing as measured by the total revenue per room, due to higher room rates, as a result of the Maasai Mara game reserve attraction.
“The report themed ‘Sailing through the storm’ focuses on hotels in Kenya and serviced apartments in Nairobi is aimed at allowing us inform our partners on the best investment segments in the hospitality sector,” Nkukuu.
“We take a look at the key fundamentals driving the sector among them the business travelers and tourism, and review how this translates to occupancy levels and revenues per room and hence the returns available for the investors,” she added.
She said many consumers nowadays prefer serviced apartments, making the apartments outperform hotels in both revenue per room and occupancy.
According to the report, despite increased supply of hotel accommodation, average hotel occupancy for all regions in Kenya remains low due to insecurity brought about by terrorist attacks as well as heightened competition from both local and emerging markets in the region such as Ethiopia.
However, Nkukuu said despite the relatively poor performance in hotels across Kenya, serviced apartments in Nairobi have performed remarkably well.
She said Upperhill is the best performing market, while the Nairobi CBD has the lowest total revenue per available room.
Johnson Denge, the Research and Site Acquisition Manager at Cytonn Investments, said the best markets for investing in the hospitality sector are serviced apartments in Nairobi, three and five-star rated hotels in Maasai Mara and business hotels in Nairobi.
“Our outlook for the sector is still positive, and we expect increased focus on development of serviced apartments in Upperhill, Westlands, Kiambu Road and Lavington due to the high occupancy levels already in the market. The hotel industry will continue to face a few challenges before occupancy levels improve to profitable levels again, however development is rife,” he said.