Kenyan Hoteliers hike prices to survive tourism dip

The fall in tourist numbers over the past five years has not dampened the hotel industry, as locals' demand for luxury beds has allowed hoteliers to increase prices to survive the headwinds.

According to investment firm Cytonn, from 2011 to 2015, international arrivals fell 10 per cent from 1.8 million to 1.1 million, while bed occupancy fell from 40 per cent to 29 per cent.

However, the average realised room rental per day, which is arrived at by calculating total room revenue and dividing this by the number of rooms in a hotel, has increased from Sh15,000 ($150) to Sh15,700 ($157) during this period.

Advisory and tax services firm PricewaterhouseCoopers (PwC) adds that extended stay in hotels fell 2.8 per cent, while the average rate charged per room rose by 9.1 per cent – allowing hoteliers to gain 6.3 per cent in room revenue.

PwC says this can be accredited to devolution, domestic tourists and businessmen exploring opportunities in rapidly expanding towns, which has helped increase the average return on hotel space in the last four years.

“Stay unit nights for Kenya as a whole fell 15 per cent over the past four years. This was, however, mitigated by an increase in domestic tourism and business travel,” the firm’s Hospitality Outlook report read.

Domestic tourism was barely a factor a decade ago, but has recently become important as middle-class incomes rise.

“In Kenya, the devolved system of government has resulted in an increase in domestic travel. Devolution has created 47 county governments in additional to the national government, and commerce within and between counties is increasing as a result,” Michael Mugasa, a partner at PwC Kenya, said.