Insecurity in Kenya unlikely to dampen investor interest - CNBC Africa

Insecurity in Kenya unlikely to dampen investor interest

East Africa

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Kenya has a good local hotel industry. PHOTO: Getty Images

“I don’t believe it will dampen investor interest. I’m well aware of the problems, particularly on the coast where I’m a frequent visitor, looking at investment.  Kenya is a very mature, very established market. There’s still a lot of potential for growth within the Kenyan market,” said W Hospitality Group managing director, Trevor Ward.

“Interestingly, unlike the majority of countries in sub-Saharan Africa, most of the international hotel chains don’t have a presence there. One of the reasons is because there’s been a very good, local industry which is developing without brands on the hotels. Chains that are not represented in Kenya to any great extent need to be there because their guests are travelling there.”

(READ MORE: Kenya angry at western travel warnings as tourists leave)

Sub-Saharan Africa seems to be attracting continued investment as a number of international and African hotel chains look to expand their presence on the continent.

It has been reported that around 31,000 hotel rooms are under construction this year in the region and Ward believes that the demand may be coming from West Africa more than anywhere else.

“It varies from country to country. I find that in East Africa, cities there like Nairobi, Kigali – there’s not a shortage of rooms per say although there is still room for more. Over in West Africa, we find that there is a shortage of quality hotel accommodation, particularly with the growth rate in the economy,” he said.

“By far the largest number of hotels and rooms, and therefore the investment, is occurring in Nigeria – now the biggest economy in Africa. [It’s] hugely undersupplied when you consider the size of the economy. There is a big gap in Nigeria.”

(READ MORE: Marriott to open 30 new hotels in S.Africa by 2020)

Ward also indicated that, by far, there are more greenfield investments on the continent than there are acquisitions and that Marriott’s recent acquisition of the Protea Hospitality Group is a rare case.

“The vast majority is greenfield investments. Marriott taking over Protea – looking at the African hotel scene, it’s very difficult to see any other deals that could be done like that because Protea was by far the largest hotel chain in number of hotels in Africa,” he explained.

“Marriott, in one foul swoop, managed to double the number of rooms that they have in Africa and obtain a massive presence in sub-Saharan Africa where they were not previously represented.”