Firms scramble to adapt businesses to SGR disruption

Transport operators on the Nairobi-Mombasa route are scrambling to change their business models to adapt to the disruption brought by the Standard Gauge Railway (SGR).

The hospitality industry is also aligning itself to take advantage of the sudden urge by Kenyans to travel to the Coast.

With data showing that the trains have been full for the past 17 days since the launch of Madaraka Express, bus companies and airlines are taking a beating due to a dive in passenger numbers.

On Thursday, Kenya Railways tweeted that its trains were already fully booked through to today, sparking online protests from eager Kenyans bitten by the SGR bug.

“Madaraka Express train No. E2 scheduled to travel to Mombasa on June 16, 17 and 18, 2017 are full,” it said.

To capitalise on the excitement, Coast hotels, which ordinarily would be on low-season, are slashing their accommodation costs - some by more than half - as the country wakes up to a vacation frenzy.

Tour operators who were relying on the road and air to ferry holiday-makers to the Coast have taken advantage of the surge to negotiate with hoteliers to further lower their charges, terming it a win-win situation.

Hotel packages

Baobab Resort in the South Coast, for instance, charges Sh12,540 per night during low season. However its SGR package is Sh15,400 for three nights including transport and transfers.

Likewise, Neptune Paradise is charging Sh15,300 for three nights on an all-inclusive SGR package whereas it normally costs Sh8,900 per night.

“There are those people who couldn’t afford to go to Mombasa for a long holiday. Now they can go for two nights,” Bonfire Adventures Chief Executive Simon Kabu told weekend Business.

The tour company, which made an arrangement with at least 20 hotels in the Coastal region last week to sell SGR packages, has seen a 50 per cent increase in the number of local tourists.

“The response has been amazing. Yesterday we had 250 clients. The only challenge is that the return train leaves very early, forcing us to pick clients from their hotels as early as 5:30am for them to be at the station by 8am,” Mr Kabu said.

This is one of the teething problems the Government says it is working on as it prepares to launch a third train on the route next month. Transport Cabinet Secretary James Macharia says they aim to have three trains from either side.

“This project was completed 18 months ahead of schedule; we admit some of the supporting infrastructure were incomplete,” he said.

“Then the contract for operation was signed just a day before we launched but these are teething problems. Next month, all the booking will go digital so Kenyans will know before they leave their homes if there is space on the train,” the CS said.

Bus companies, who are the worst-hit by the exodus in passenger traffic, have lowered their fares while some have shifted their attention to other routes.

On Thursday, Dreamline Coaches opened a new station at Mlolongo to capitalise on those who miss the train.

“In case you miss the Madaraka Express, you can book and board our 10am Aircon bus to Mombasa from our Mlolongo sub-office. We are conveniently located 10 minutes away from the SGR so there is no need to postpone your journey,” the firm said.

The company has also introduced a new daily bus service to Kisii and Migori, while low cost airline Jambojet has cut its floor price on the Nairobi-Mombasa route by 23 per cent to Sh3,200 from Sh4,200.

A source at the budget carrier told Weekend Business that the airline industry is facing a huge challenge from the SGR. Other airlines normally charge above Sh7,000 on the route.

At Sh3,200, Jambojet has now placed its floor price just Sh200 above the VIP rate for the SGR, hoping to lure passengers on the time advantage air travel has.

Chief Executive Willem Hondius, however, says the price cut is part of a promotion since it is low season.

“The campaign started in May to stimulate traffic. SGR was launched just two weeks ago so we don’t know yet whether it will have an impact on us,” he said.

Aware of the disruption the SGR has brought, the Government says it is up to businesses to adapt.

“The winner in all these price wars is the mwananchi. It is something that had to happen because we did not do this to kill the buses or trailers,” Macharia said.