In PwC’s African hotel forecast for 2021, its team of hotel specialists discuss the outlook for Kenya. Tourism Update shares the outcome of these findings.
PwC reports that the Kenyan government has been instrumental in boosting the country’s forecast tourism potential. “The 16% VAT on park entrance fees has been eliminated, visa fees for children have been removed, and Kenya Wildlife Service park fees have also been reduced. The government also waived the landing fees for charter flights at Mombasa and Malindi airports and authorised Ksh4.5bn (€37 million) in the national budget to promote tourism. In addition, the government is investing in transport infrastructure, including the expansion of airports to accommodate more travellers, and a new road.”
These developments, along with a stable local economy, are attracting international hotels to Kenya. Sheraton, Ramada, Hilton, Best Western, Radisson, Marriott, and Mövenpick are among the international brands scheduled to open during the next five years.
PwC reports that a total of 13 new hotels are expected to open by 2021, adding 2 400 rooms and expanding the hotel capacity by 13% with a 2.5% compound annual increase in available rooms over the next five years. “Helped by an increase in flights to Kenya, lower park fees, a stable economy, and ongoing growth in domestic tourism, we project guest nights to build on their recent momentum and rise at a 4.1% compound annual rate during the next four years.”
Room rates
With new hotels increasing supply, room rates are expected to continue to grow relatively moderately as “hotels look to sustain their recent expansion in the face of growing competition”.
Room rate growth is expected to average 3.3% compounded annually through 2021. “Occupancy rates are set to decline over the next year before edging up in 2019.”
The hotel occupancy rate will rise to 57.4% in 2021, up from 52.9% in 2016, but still well below the 66.1% rate achieved in 2011.
Room revenue
“We project the number of available rooms to increase from 18 600 in 2016 to 21 000 in 2021, a 2.5% compound annual increase. Guest nights will total an estimated 4.4 million in 2021, a 4.1% compound annual increase.”
The occupancy rate will fall during the next year, with PwC projecting capacity to grow faster than demand in the near term, but grow more slowly over the 2019-21 period. “For the forecast period as a whole, stay unit nights will grow faster than capacity and hotel occupancy will rise to an estimated 57.4% in 2021.”
Total room revenue will expand by 7.5% compounded annually, rising to US$735 million in 2021.
