State restarts privatisation drive with sale of hotels

Kabarnet Hotel is among the state-owned hotels up for sale. [Yvonne Chepkwony, Standard]

The government has restarted the sale of seven state-owned hotels in a move to ease pressure on the public purse and also earn some revenue from the privatisation.

The hotels are in addition to the 11 parastatals that the government recently said it planned to sell.

The Kenya Kwanza administration has been buoyed by a new law enacted towards the end of last year that cut the approval process for the National Treasury in offloading its ownership in state-owned entities.

The Privatisation Authority has said it is looking for a transaction advisor who will guide the sale of the hotels spread across the country. 

These include the three hotels under the Kenya Safari Lodges and Hotels Ltd - Mombasa Beach Hotel, Ngulia Safari Lodge, and Voi Safari Lodge - that are co-owned by Mt Lodge Ltd and the Kenya Wildlife Service. 

The other hotels are the Golf Hotel, Sunset Hotel, Mt Elgon Lodge and Kabarnet Hotel. 

“The Privatisation Authority invites sealed proposals from interested and eligible consultants for provision of advisory services…on the privatisation of Kenya Development Corporation (KDC) controlled hotels,” said the Authority in a public notice Tuesday. 

It added that in the sale of the hotels owned by Kenya Safari Lodges and Hotels, the other shareholder would be offered the first right to acquire the hotels but “failure to exercise the pre-emptive rights, the sale of shares will be through an open tender”.

The other hotels are expected to be sold through an open tender while Kabarnet Hotel will entail sale of assets. 

The Privatisation Act 2023, which came into force in October, gives the National Treasury authority to sell off the entities without Parliament's approval. 

The new law gives the government tighter control of its ambitious privatisation drive, assigning the responsibility of formulating the sale programme to the Treasury Cabinet Secretary.

Thereafter, the programme shall be submitted to and approved by Cabinet. The role of the National Assembly is to ratify the programme.

The government plans to offload its shareholding in  11 other state corporations to the private sector.

These include Kenya Pipeline Company, New KCC and the Kenyatta International Convention Centre. They are among the 35 state firms that President William Ruto said are ready for privatisation.

“These divestitures are expected to stimulate the expansion of our nation’s hospitality industry and grow the individual units through private sector investment,” said the Cabinet despatch on February 14 following its meeting in which it approved sale of "non-strategic" state-owned enterprises.

“The move aligns with the ongoing rebound of the tourism sector that has been buoyed by the visa free entry regime in Kenya and promises to deliver increased employment and business opportunities in both the divested enterprises as well as across the entire tourism sector.”

The Privatisation Authority had in a previous attempt tried to sell its stake in the Intercontinental, Hilton and Mountain Lodge hotels.

The sale was put on hold following turbulent years for the tourism industry between 2014 and 2016, which resulted in industry players shying away from making major investments and the government felt it would not get a good deal.

Intercontinental and Hiton have since shut down, while Serena, which was running Mountain Lodge under a commercial agreement with the state, has since exited.