Nairobi Loses its Gleam as a Hotel Investment Destination; Kampala, Dar es Salaam and Addis Ababa Shine
Nairobi plays a host to some of the well-known global hotel brands such as Radisson Blu, Sarova and Intercontinental. However, a new report has indicated that Kampala, Dar es Salaam and Addis Ababa hold better prospects for hotel investments in East Africa.
According to a report by Wayne Troughton of HTI Consulting, Nairobi has an oversupply of hotel keys, signalling lower rates of return for investors. Kigali has also been placed at the bottom due to its limited demand for hotel bookings.
With Kampala’s minimal branded hotels and the improved oil prices, Troughton expects the City to provide a “strategic and attractive opportunity for investors.”
However, for Addis Ababa, the lack of forex could prove a challenge to external investors who are currently battling to complete their hotel constructions. Troughton notes that if a developer has adequate financial backing, then the “opportunity is there”, he added.
Dar es Salaam is a market with plenty of opportunities, the report denoted. It has a lack of direction in policy for the private sector, increases supply in the CBD and reduced levels of demand.
“Whilst the CBD node is experiencing occupancy and ADR pressure, the outlook on the Peninsula is more optimistic,” it said.
“We are tracking investment from structured funds, predominantly from Europe and the Middle East; an increasing percentage of High Net Worth Individuals (HNWIs) from Europe, Middle East, and Africa itself), Owner-operators that invest from Europe, Africa and the USA), as well as Family Offices the Middle East, the UK, Europe, and SA,” he said.
The report also concluded that the most popular investment opportunity at the moment includes midscale urban hotel assets of 150 rooms, which are located close to corporates, conferencing centres and transport nodes.
The HTI Consulting report is in contrast with the recently released Hotel Chain Development Pipeline in Africa 2019, which stated that there were 27 Global Hotels readying to enter the Kenyan market by 2023.
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