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Gigiri or Athi River? Tips on setting up a booming hotel

REAL ESTATE
By Peter Theuri | September 16th 2021

The Tribe Hotel at Village Market in Nairobi. [Wilberforce Okwiri,Standard]

The Covid-19 pandemic has hit the hospitality and food industry with unprecedented wrath, forcing many investors to abandon ship.

Within months of the viral outbreak, several high-end hotels in Nairobi had wound up operations.

A few resilient ones held on while others fought from the abyss to bounce back after what looked like certain death.

Inside Nairobi’s central business district (CBD), hotels have had to innovate to survive the pandemic. They have been forced to do a lot to more to attract and maintain clientele and retain high-level status.

A lot of effort goes into running a hotel and Nairobi is home to the bulk of Kenya’s four and five-star hotels.

In previous rankings by the Kenya Tourism Authority, many regions did not have five-star hotels. With many of them concentrated in the city, the competition has always been stiff.

So where should an investor focus when planning to open a high-end hotel, and is the hospitality industry still a viable investment option?

“It really does not matter if the hotel is in the CBD or elsewhere, what matters is the business model that is used in running a hotel,” says Kenya Association of Hotelkeepers and Caterers (KAHC) chief executive Michael Macharia.

“In the end, it is all about perfecting the art of marketing to attract clients.”

Mohammed Hersi, a seasoned hotelier and former chairman of Kenya Tourism Federation, differs, saying location is one of the biggest contributors to the success, or failure, of a hotel.

This is especially because some clients can only be found in certain areas and putting up where the target market is likely to access it easily is a huge advantage. One knows with certainty what services to offer.

“You profile your clientele before you build. And because you cannot serve everyone, you have to make a choice,” says Mr Hersi.

“Once you have that, set up where they can access you.”

Hersi puts high-end hotels in the city into five distinct categories based on the target clientele.

“The first zone is the CBD, where we have top hotels serving the population in the city centre, including visiting guests of the State,” he says.

These ones are in close proximity to government offices and private firms. The CBD itself is a hive of activity, and has thousands of office workers who are served by these hotels.

The second category, Hersi says, is Westlands and Gigiri. The hotels there serve the diplomatic community in Gigiri, where the United Nations offices and many embassies are located.

These hotels include those in Westlands all the way to the ones nearer Gigiri, such as Tribe Hotel, Trademark Hotel, and other top establishments in the Village Market area.

Westlands is growing fast as an independent hospitality centre with huge potential and investors can be optimistic of opening a successful business there.

These two regions, Westlands and Gigiri, are ‘blue zones’ - the crime rates are low and access to amenities is more assured than in majority of the city.

Dwellers in these regions live more comfortable lives than most others in the country.

The third category serves people who are visiting the city for financial services in the rapidly growing Upperhill.

Most of the hotels in this area will be four-star, with the business community less sophisticated than the diplomatic community or even tourists.

“Fourth are the hotels that are situated along Mombasa Road and the Industrial Area, which are liked by people who have landed at Jomo Kenyatta International Airport (JKIA) but who do not want to enter the CBD because they do not have any business there,” Hersi says.

This could include hotels located inside the airport for clients who are on transit.

The last category is in the environs of the city, such as Safari Park Hotel on Thika Road or Maanzoni Lodge in Athi River.

All these hotels have their clients and with good research, investors can tap into any of these markets and make their fortune.

Investors can also determine what kind of services to offer based on the clientele. “The business community will make do with a very good four-star hotel. When a golf-course is established then one will need a five-star resort,” Hersi says.

The best way to make sure that a hotel is always marketable, however, is to under-promise and to over-deliver.

This is where a four-star hotel offers services almost commensurate with those of a five-star hotel.

“One of the things that makes the difference between some of these hotels is simply the soft services,” Hersi says.

“Serve the customers with a smile, be friendly, be professional. That does not need financial investment to achieve.”

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Covid 19 Time Series

 

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