Hospitality real estate firmly on recovery path

Java House, Kimathi Street.

Java House, Kimathi Street. Recently, Java opened a new branch at the Business Bay Square Mall in Eastleigh. 

Photo credit: Lucy Wanjiru | Nation Media Group

After a period of great uncertainty following the outbreak of the Covid-19 pandemic, the hospitality industry is finally exhibiting signs of recovery, with investors showing renewed interest in the sector.

In early June for instance, The Pan Pacific Hotels Group, a subsidiary of Singapore-based developer UOL Group, announced its entry into the African market with the opening of a 175-suit facility at the Global Trade Centre (GTC) in Westlands, Nairobi.

Recently also, the Qatari Investment Authority, through its private equity fund Kasada Hospitality, bought into the Crowne Plaza Hotel at an estimated Sh4.6 billion. In yet another deal, private equity firm Actis announced completing payment of some Sh1 billion for the acquisition of three Kenyan hotels, namely Fairview Hotel, Town Lodge Upper Hill, and City Lodge Two Rivers.

Reportedly, more than 20 international hotel chains plan to venture into the Kenyan market within the next few years. Local restaurants and hotels have also been on a rapid expansion drive.

In early June, coffee chain Java House opened a new branch at the Business Bay Square Mall in Eastleigh, Nairobi, bringing its total number of outlets to 84.

 “The hospitality industry in Africa is witnessing a gradual resurgence, with signs of returning to pre-pandemic levels. The increase in non-performing assets during the pandemic era has interestingly resulted in a renewed focus on the market from global capital,” says Alyana Popat, the Chief Hospitality Officer at Simba Corporation.


Most travellers now prefer on-line booking and contactless check-ins.

Photo credit: Shutterstock

The Simba Corporation is one of the local hospitality brands on an expansion campaign, with Ms Popat saying the business is actively engaged in discussions with various stakeholders to enable them to expand their hospitality portfolio within Kenya and the region. The hotelier attributes the positive comeback of the industry to a number of factors, including the government's fiscal incentives, a significant influx of domestic travellers, and notable investments in the development of new high-end hotels.

Domestic tourism

“Kenya's government and industry stakeholders have been implementing measures to support the recovery, such as promoting domestic tourism and implementing health and safety protocols. The country's popular tourist destinations, such as Maasai Mara, Nairobi, and the coastal region, have been working to attract visitors and restore confidence,” notes Ms Popat.

James Waswa, a property valuer with Chrisca Real Estates, observes that Kenya’s diplomatic ties have also had a positive impact on the country’s hospitality real estate segment.

“The location of the United Nations, for instance, has played a big part in promoting Kenya’s hospitality industry. By extension, this has changed the perception of international travellers about visiting or even living here,” notes Waswa.

Quicker flights, good marketing campaigns, visa-on-arrival policies, and a relatively stable political environment have also seen the country get positive reviews on platforms such as Trip Advisor, Rough Guides and World Travel, therefore boosting the growth of the industry.

“The pandemic may have dealt a severe blow to the country’s hospitality sector, but the pent-up demand for travel and leisure activities is bringing life back into the sector. Compared to many other tourist destinations, Kenya also has relatively fair hotel rates and it is generally not expensive to travel to Kenya,” notes Waswa.

Advancements in infrastructure, especially within Nairobi and at the coast, have also led to the growth of the sector. New road and rail networks such as the Nairobi Expressway, the Standard Gauge railway line, and other major bypasses have eased traffic into major cities, attracting more visitors to these places.

Dave Mua,

Dave Mua, Real estate agent at Dunhill Consulting Ltd.

Photo credit: Pool

The increase in hospitality developments has created a larger pool of choice from which consumers can pick, creating competition amongst hoteliers. Competing to get customers, these businesses have had to rethink their business models, putting more emphasis on the customers’ needs.

“The hospitality industry has always been about the experience. From the pick-up at the airport to the ambience in the lobby to the décor on the walls, whether they may say it or not, guests are always looking to be overwhelmed with a wholesome experience,” notes Waswa.

Personalised experiences

Hotels such as Radisson Blu, Movenpick, and Tamarind Tree are some of the new entrants in the market that have been keen on trying to address some of these user needs, by incorporating elements such as nature-themed designs and decor, or modern amenities in their establishments.

Michael Omondi, a realtor with Home Sweet Home, says that tourists are also now seeking accommodation that prioritises safety, hygiene, and personalised experiences. In response to these evolving needs, the realtor notes that developers and hoteliers are leveraging new technologies to refurbish their establishments.

“Buyers are seeking properties that offer contactless check-ins, enhanced cleaning protocols, and health-focused amenities. Developers and hoteliers are responding by investing in state-of-the-art technologies, implementing robust health and safety measures, and revamping their properties to provide secluded and nature-immersed experiences,” says Omondi.

The realtor adds that eco-friendly accommodations are also gaining popularity, with developers incorporating sustainable elements such as solar panels and eco-conscious designs in their structures. “Unique and experiential accommodations, such as eco-lodges, glamping sites, and cultural homestays are gaining traction among travellers seeking authentic experiences. This is leading to collaborations between investors and local communities, to foster sustainable development in the hospitality real estate market,” notes Omondi.

Michael Omondi

Michael Omondi, Realtor, real estate firm Home Sweet Home.

Photo credit: Pool

Dave Mua, a real estate agent with Dunhill Consulting, says that the changing landscape of the hospitality real estate market has brought with it a shift in buyer preferences. Serviced and furnished apartments as well as vacation rentals are witnessing an uptick in occupancy rates, with demand coming in from local tourists seeking an escape from the confines of their homes, to explore the beauty of the environs around them.

These luxury apartments are now incorporating elements such as wellness retreats, equipped with private spas, yoga studios, and organic dining options to attract customers. Amenities such as swimming pools and lounges are also becoming a constant in many of these developments.

“Different buyers have different tastes, but generally speaking, most buyers are currently looking out for modern amenities that can combine work and play. Attuned to this trend, a lot more developers are now working to incorporate such amenities into their establishments,” notes Mua.

He adds that with the local tourism market proving to be a more reliable source of revenue especially during crises such as the pandemic, stakeholders are now tailoring their product offerings to this group of customers.

“Unlike before where foreigners were the main target for marketers, the focus has now shifted to the local tourists. This group has proven to be a more reliable market especially during crises such as the pandemic,” notes Mua.

When travelling out of town for a vacation for instance, this group is more likely to seek accommodation in Airbnbs as opposed to hotels to save on cost.

For this reason, Robinson Muthoni, the Marketing and Communications Manager at Kanma Adventures, says that the hotels and resorts are either bringing down their prices, or switching to offering both self-catering villas and hotel rooms to keep their clientele.

“Many clients now prefer private arrangements, where one travels in the company of close friends or family. When they get to the destination, they still prefer to hang out with the same group and mingle less with strangers. While some hotels are facing low occupancy rates, there has been an uptick in the demand for Airbnbs, with visits going up by 68 per cent in the last few years,” notes Robinson.

Recognising the potential for growth and profitability in the emerging niche markets such as Airbnb, serviced apartments and luxury holiday homes, developers are putting up a lot of these developments. The downside of this is that it is creating a market saturation, which is bringing about issues such as uncompetitive pricing and low quality.

In a general sense though, Robinson says the country’s hospitality industry has a promising future, despite the challenges that it has been facing in the past couple of years, and the promotion of local travel and the exploration of domestic tourist destinations will help sustain the industry during periods of uncertainty and provide a foundation for growth.

“Efforts to showcase Kenya's diverse landscapes, cultural heritage, and wildlife attractions to the local population can contribute to the industry's revival,” notes Robinson.

Alyana Popat of Simba Corporation, says that the integration of technology and digital solutions into hotels, holiday homes and luxury serviced apartments will be key in accelerating growth in the industry.

“Online bookings, contactless check-ins, and digital marketing strategies will help to enhance operational efficiency,” she comments, adding that investments in renewable energy, waste management, and community engagement, for instance, will set an important benchmark for responsible tourism in the region.


“Travelers are increasingly seeking experiences that align with environmental conservation, community development, and cultural preservation. The global trend towards sustainable and responsible tourism is thus likely to continue shaping practices within the industry,” notes Ms Popat.

To attract further growth into the industry, she says that stakeholders will also have to diversify their offerings beyond traditional safari experiences.

These could include the development of niche tourism segments such as eco-tourism, adventure tourism, cultural tourism, and wellness tourism. However, the rising cost of living, if not addressed, could become a major stumbling block to the growth of these assets. Incentives from the government, such as lower taxes on players in the hospitality industry, could therefore be timely interventions.