Hotel acquisitions, management deals soar on improved demand for rooms

Six Eighty Hotel Nairobi

Six Eighty Hotel Nairobi along Muindi Mbingu Street on July 28, 2022.
 

Photo credit: Diana Ngila | Nation Media Group

Hotel acquisitions and management pacts in Kenya have soared in the past year as investors line up to capitalise on rebounding room sales due to improving conditions within the sector.

A review of the transaction scene shows that at least five acquisition and lease management deals have been signed since the turn of this year—building a global trend as the hospitality industry recovers from the economic fallout of the Covid-19 scourge.

In the latest big-ticket deal, a Qatari-backed private equity fund, Kasanda on July 28, 2022, announced a Sh4.9 billion acquisition of the former Crowne Plaza in Nairobi not long after it purchased the Umubano Hotel in Kigali, Rwanda as part of a strategy to become a pan-African hotelier through the purchase of high-end assets.

“This acquisition offers us a gateway into Nairobi’s vibrant ecosystem of innovation and entrepreneurship. We look forward to launching our ambitious renovation programme for this hotel with the aim of repositioning it to attract more international travellers and become the place to be for the local community,” said Olivier Granet, Kasada’s Managing Partner and chief executive.

The Crowne Plaza, which opened in 2010, is located in Upper Hill-- Nairobi’s financial centre and a commercial hub that is home to the headquarters of several local businesses, international institutions, and diplomatic delegations.

The hotel has 206 rooms, a ballroom that can accommodate 300 people, and over 10 meeting rooms with a total capacity of 550 people—making it one of the facilities with the largest meeting and event spaces in Nairobi.

“Thanks to our expertise and support, Nairobi’s Crowne Plaza Hotel is about to enter a new life cycle and contribute to the revitalisation of the Kenyan hospitality sector post-Covid 19 pandemic,” said Mr Granet.

In another deal, Machakos-based Maanzoni Lodges has received regulatory approval to buy the three-star 680 Hotel in Nairobi for an estimated Sh1.2 billion from Setrim Hotel chain—a deal that is expected to add to the chain of acquisitions within the industry. The 680 got its name from the number of beds it had when it opened its doors.

In July last year, the Kenyan hotel industry registered yet another acquisition deal when the South African owners of Nairobi’s Fairview Hotel, Town Lodge, and City Lodge Two Rivers announced the sale of the three hotels to private equity fund Actis for Sh1 billion.

 Flamingo Prideinn Beach Resort

Tourists enjoy at Flamingo Prideinn Beach Resort in Mombasa as hospitaly industry makes a comeback after Covid 19 pandemic.


Photo credit: File | Nation Media Group

City Lodge Hotel Group put up the three Kenyan hotels and Tanzania’s City Lodge Hotel in Dar es Salaam for sale in plans to exit East Africa after barely seven years of operation. It plans to sell the Tanzania hotel for Sh7.3 million.

The deal scene in the Kenyan hospitality industry has also witnessed a surge in management contracts over recent months.

In June this year, local hospitality group PrideInn signed a deal to manage a third hotel belonging to Azure Hospitality Group at the Signature Mall on the Mombasa highway named PrideInn Plaza.

The hotel chain will manage PrideInn Plaza with 64 luxury rooms and suites, nine conference halls, a restaurant, a lounge, and a sky view bar. The hotel chain took over Pride Inn Azure hotel in 2020 and Azure Mara Haven this year which it rebranded as PrideInn Mara Camp. In April this year, there was yet another deal in the Kenyan hospitality industry when hotel chain Sarova Hotels and Resorts penned a management contract with Mayfair Holdings Limited to run the iconic Kisumu Imperial Hotel for seven years—marking its entry into the western Kenya circuit.

Kisumu Imperial hotel

Mayfair Holdings owns Kisumu Imperial hotel. The deal will see the hotel that has been under renovation since 2020 at Sh500 million renamed Sarova Imperial Hotel, Kisumu. The three-star facility will run 93 renovated guest bedrooms including suites, new meeting facilities, and upgraded food and beverage outlets.

“Having a presence in Kisumu City and the larger Western Kenya region has always been part of the hospitality group’s growth plan,” said Sarova Hotels Kenya Managing Director Jimi Kariuki when he signed the deal to run the 48-year-old facility.

The rising acquisition and management deals reflect a gradual recovery in room sales as the hospitality industry rebounded, helping to prop the economy to a 6.8 per cent GDP growth in the first quarter of the current financial year.

GDP growth in the first quarter took off strongly, especially in accommodation and food services which expanded 56.2 per cent in the first quarter of 2022 from a contraction of 33 per cent on higher tourist numbers as Covid-19 curbs were relaxed.

The number of visitor arrivals through Jomo Kenyatta International Airport and Moi International Airport rose by 85.per cent from 121,739 in the first quarter of 2021 to 225,321 visitors in the first quarter of 2022.

Some of the hotels shut down during the pandemic were reopened and industry hires resumed as demand picked up.

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