Empty beds cost hotel industry Sh7b revenue

Income from room sales fell from Sh50b in 2016 to Sh44b. [File, Standard]

Kenya’s hoteliers lost close to Sh7 billion in foregone revenue last year following the uncertainty surrounding elections.

A new report from consultancy group PricewaterhouseCoopers (PwC) indicates that hoteliers suffered numerous cancellations following the Supreme Court’s landmark ruling on September 1 that annulled the presidential results of the August 4 elections and called for a repeat poll.

“The market started out strong in 2017, but the sharp decline during the latter part of the year following the Supreme Court ruling led to a shortfall relative to our projections,” says PWC in the report.

Further, increased supply in bed capacity from newly completed hotels and lodges around the country’s top destinations drove overall occupancy rates during the peak season to below 50 per cent for the first time in close to 10 years.

“The occupancy rate of 47 per cent was lower than our 52 per cent projection,” says PwC. “Guest nights fell to 3.3 million instead of rising to 3.7 million, and the 13 per cent decrease in room revenue was well below our three per cent expected increase.”

As a result, total room revenue collected by the sector dropped from $504 million (Sh50 billion) in 2016 to $436 million (Sh43 billion) made over a similar period last year.

PWC says data for the report was generated from surveys, data on the industry and forecasting models based on historical performance of the sector, pricing trends and estimates of domestic and international overnight travel.

The report differs from figures provided by the Kenya National Bureau of Statistics (KNBS) that paint a different picture for the sector.

According to KNBS, tourism earnings increased 20.3 per cent from Sh99 billion in 2016 to Sh119 billion last year, with the number of international visitor arrivals increasing by 8.1 per cent to 1.4 million during the same period.

“The number of hotel bed-nights occupancy increased by 11.3 per cent from 6.4 million in 2016 to 7.1 million in 2017,” says the State agency in the 2018 Economic Survey.

KNBS, however, says the number of international conferences contracted by 15.9 per cent from 227 in 2016 to 191 recorded during the election year.

According to PWC, Kenya’s tourism industry is set to bounce back to its previous growth path by the end of 2019 with tourism arrivals to the country set to hit 1.6 million.

This will be the highest number of tourists recorded since 2012 when repeated terrorism attacks from the Al Shabaab militia and travel advisories by the country’s main source markets spurred a downward trend.

“Over the next two years, Kenya will also benefit from a number of new hotels opening, including Hilton, Radisson Blu, Pullman, Best Western,and Mo?venpick,” says the PWC report.